Guide
How to Calculate the Break-Even Sale Price on a House Flip
Team RE Underwrite Lab
To calculate a house flip’s break-even sale price, divide your costs that stay fixed as the sale price changes by one minus your percentage-based selling costs. If you have $249,000 in fixed costs and expect to spend 6% of the sale price on selling costs, you need about $264,894 to break even.
The break-even sale price formula
Break-even sale price = fixed project costs ÷ (1 − variable selling-cost rate). In this formula, “fixed” means the dollar amount stays the same when you change the sale price. It can still rise if the renovation runs late or the scope changes.
Include the purchase price, rehab, buying costs, holding costs, financing costs, and flat selling costs in the numerator. Put charges that scale with sale price in the denominator. If a concession is a fixed dollar amount, put it in the numerator. If it is a percentage of the sale price, add that percentage to the variable selling-cost rate.
Example using a $300,000 resale estimate
| Cost | Amount |
|---|---|
| Purchase price | $185,000 |
| Rehab | $42,000 |
| Buying costs | $4,000 |
| Holding costs | $5,000 |
| Financing costs | $11,000 |
| Flat selling costs | $2,000 |
| Fixed project costs | $249,000 |
At a $300,000 sale, 6% variable selling costs are $18,000. Estimated project profit is $300,000 − $18,000 − $249,000 = $33,000 before income taxes. At $270,000, estimated profit falls to $4,800. If a delay also adds $6,000 in interest and carrying costs, the $270,000 sale produces a $1,200 loss.
What sale price gives you your target profit?
Add the target profit to the fixed cost total before dividing. For a $25,000 target, the example needs ($249,000 + $25,000) ÷ 0.94, or about $291,489. Compare that number to the resale range supported by your comps. If you have not done that yet, build an after-repair value range from sold comps. A projected sale price of $300,000 leaves about $8,511 of sale-price room before you miss that target.
Should you include loan payoff?
If you already included the purchase and rehab costs, adding repayment of the borrowed principal again would double-count those costs. Include interest, points, and lender fees in the profit calculation. Use the full payoff separately when you estimate the cash you will receive at closing.
Run the purchase price, rehab and resale assumptions through the RE Underwrite Lab fix and flip calculator. The free tool uses default holding and financing assumptions. Use your own quotes and terms for the break-even calculation above.
Example only. Not financial, investment, legal, tax, lending, or appraisal advice.
Estimates only. Not financial, legal, tax, or investment advice. RE Underwrite Lab calculators and PDF reports provide educational estimates based on the numbers you enter. Actual purchase costs, rents, expenses, financing terms, taxes, insurance, vacancy, rehab costs, refinance eligibility, and returns vary by property, market, lender, and local law (including short-term rental rules). We do not guarantee any outcome, profit, cash flow, or appraisal. Some content and tools may be generated or assisted by artificial intelligence and can contain errors. Always verify assumptions with licensed professionals and your own due diligence before making decisions.