The Anatomy of a Profitable Flip: A Case Study

A detailed walkthrough of a real flip deal from acquisition through sale, with numbers at every stage.

Let's walk through a typical profitable fix-and-flip deal to illustrate how each component of the analysis contributes to the outcome.

The subject property was a 3-bedroom, 2-bathroom ranch in a suburban Phoenix neighborhood. It was listed on the MLS at $225,000 after sitting for 45 days, well above average DOM for the area, signaling motivation.

Our analysis started with ARV. We identified five comparable sales within 0.5 miles that had been renovated to a similar standard in the past 90 days. After adjustments, the average comp value was $340,000. We set our ARV at $335,000, using a conservative approach.

Applying the 70% rule: $335,000 × 0.70 = $234,500. Estimated repairs based on our standardized scope of work came to $55,000 (new kitchen, both bathrooms, flooring throughout, paint, landscaping). MAO = $234,500 − $55,000 = $179,500.

We offered $175,000 and closed at $180,000. Actual renovation costs came in at $52,000 (under budget). Holding costs for the 4-month project: $12,000 (hard money interest, insurance, utilities, taxes). Selling costs (agent commissions, closing): $20,000.

Total investment: $180,000 + $52,000 + $12,000 + $20,000 = $264,000. Sale price: $339,000. Net profit: $75,000, a 28.4% return on total capital deployed over four months.