What is a flip margin?
A flip margin is what remains of the sale price after you have paid for everything it took to buy, renovate, hold and sell the property. It is a sum of money. It only becomes a percentage when you divide it by something, and the choice of that base changes how a project looks.
Many investors start from the difference between the purchase price and the after repair value (ARV), the estimate of what the finished property should sell for. That difference is a starting point, not the margin. It leaves out the costs that happen between the two dates, and those costs are where most flips lose their profit.
What goes into the flip margin formula?
The formula takes the sale price and subtracts every cost the project creates: margin equals sale price minus the sum of purchase price, buying costs, renovation, holding costs, selling costs and taxes. Each part of that sum has its own sources:
- Purchase price: the amount paid to the seller.
- Buying costs: legal fees, registration and the loan fees charged at purchase, which is where closing costs on the buy side belong.
- Renovation: the contractor draws, materials and change orders, plus the contingency you set aside for what cannot be seen yet.
- Holding costs: hard money or bridge loan interest, insurance, utilities and property tax for every month you own the property.
- Selling costs: the agent commission and the closing costs on the sale.
- Taxes: the tax on the sale or on the gain, as it applies where you live. Take that figure from your tax adviser, not from this article.
What does a calculation template look like?
Copy the lines below into a sheet, one row per cost, and fill them in before you sign anything. The numbers are an example only. They are round, made up for illustration, and are not market data.
| Line | What to enter | Example only |
|---|---|---|
| Sale price | Your realistic estimate of the sale price, with the source of the estimate noted | 300,000 |
| Purchase price | The agreed price of the property | 200,000 |
| Buying costs | Legal, registration and loan fees at purchase | 10,000 |
| Renovation | The total of the cost estimate, plus the contingency | 60,000 |
| Holding costs | Monthly interest, insurance, utilities and tax, multiplied by the months you expect to hold | 8,000 |
| Selling costs | Agent commission and closing costs on the sale | 12,000 |
| Taxes | The amount confirmed by your tax adviser | 5,000 |
| Margin | Sale price minus the total of the six cost lines above | 5,000 |
What happens to the margin once demolition starts?
Much of the margin that disappears is lost in the first weeks, after the walls come down. Hidden conditions appear: damp behind a finish, wiring that does not meet the current standard, a beam that was not in the survey, or a pipe that has to move. Each of these is real money, and each was in the building before anyone could see it. The purchase price does not change, so the loss only shows in the renovation line, and only if somebody records it.
The defence is a contingency sized before the purchase, and a rule that every change order is priced, approved and entered before the contractor starts the work. A verbal extra agreed on site is the most common way for a margin to disappear without anyone noticing, because it has no date, no price and no owner until someone writes it down.
How does time take the margin away?
Every month you own the property adds holding costs. Interest on a hard money or bridge loan, insurance, utilities and property tax keep arriving whether or not the work moves. A project that runs four months longer than planned pays those four months as well, and it does so quietly, because no single week looks expensive.
Add the monthly holding cost to the template, multiply it by the months you expect to hold, and recalculate the margin each time the forecast end date moves. A milestone that runs late keeps every other cost running too. Reperline raises a signal when a milestone is forecast to end more than 7 days after its planned date, so the late month is visible while there is still time to act. The schedule module explains how that forecast is made.
How do you check quality without guessing?
Quality checked by eye is the second place the margin goes. A finish that looks right from the doorway may fail at the joints, and a room that passed on Friday may need redoing on Monday. Rework pays for labour and materials twice, and a late correction often pushes the sale date back, which adds holding costs again. The cheapest fix is a written list agreed before the work starts.
Write a list for each room or stage with the items that count as done: the levels, the joints, the sockets, the paint coat and the cleaning. Check each item before the contractor is paid, and keep the list with the photos, so a decision about a price cut at sale rests on a record and not on memory. Reperline does not manage punch lists, so the list stays in your own tool. What Reperline adds is the dated evidence: site staff report each stage from Telegram with a percentage, a note and up to five photos, and the site report sits next to the budget. Six checks review each site entry before it is used, and the field facts module describes them.
How does Reperline fit into a flip?
Reperline keeps the cost and schedule side of a renovation in one place. It does not compute the margin, the ARV, the sale price, loan interest or ROI. Those stay in your own arithmetic, which is why the template above matters. Holding costs such as interest, insurance, utilities and property tax can be added as ordinary budget items, so they count in the forecast spend of the project.
The renovation and flipping template has eight stages, from survey and design through demolition, services, walls, finishes, furniture and appliances, cleaning and photos, to sale or rental. It has six budget groups, one of them contingency. Every amount starts at zero, so the owner enters the figures. Commitments count toward the forecast spend of their budget item, so an agreed change order can be entered there as soon as it is signed. The owner can change the default thresholds on Project Pro and Enterprise. The Project plan costs €39 a month per project, Project Pro costs €199, and a 14 day free trial needs no card. See the pricing page for the full comparison.
For the timing side of the same project, read renovation overruns before the invoice. The budget module explains the cost side, and the signals module lists every warning. Teams working on a flip can find the template described on the flipping page.