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.