Pull 3–5 closed comps within 0.5 miles, same property type, sold within 90 days, in renovated condition. Weight the most similar comps most heavily. This is your ceiling — everything else works backward from here.
Walk the property before you analyze the numbers. Get a scope of work: roof, HVAC, electrical, plumbing, kitchen, baths, flooring, paint, exterior. Price each category. Add 10–15% contingency. Never rely on a seller's estimate.
Maximum Allowable Offer = (ARV × 0.70) − Rehab Costs. This is your ceiling on the offer. You can offer less — you should never offer more.
Net Profit = ARV − Purchase Price − Rehab − Closing Costs (buy + sell) − Holding Costs − Financing Costs. A deal that shows $40k+ net profit on a full analysis is worth pursuing. Under $25k on a typical flip means the risk/reward is marginal.
Can you wholesale it if the flip doesn't pencil? Can you rent it if the market softens? Deals with multiple viable exits are lower risk than single-exit plays.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has analyzed thousands of deals across Northern Virginia and built FreeDealCalc to systematize the process.