How I Analyze a Flip Deal

I've looked at hundreds of properties since I started flipping houses in Nashville. The ones that made money all had one thing in common — the numbers worked before I ever picked up a hammer. The ones where I stretched the math or got excited about the "potential"? Those are the ones that taught expensive lessons.

Here's exactly how I analyze every deal that comes across my desk. No magic formulas. Just disciplined math.

Start with the ARV

The After-Repair Value is the single most important number in any flip. It's what the house will sell for after the renovation is complete. Get this wrong, and nothing else matters.

I pull comps by looking at 3-5 recent sales within half a mile of the subject property. I want houses with similar square footage, similar bedroom and bathroom counts, and ideally similar lot sizes. In Nashville, I also pay attention to which side of a major road the property sits on — that can swing values by 10-15% in some neighborhoods.

Here's what I adjust for:

• Extra bathroom: Typically adds $10-15K in the Nashville market
• Garage vs. no garage: $15-25K difference depending on the neighborhood
• Lot size: Matters more in East Nashville and 12 South, less in suburban areas
• Age and condition of comps: A recently flipped comp tells me more than a 10-year-old sale

I'm conservative with the ARV. If the comps suggest a range of $380K to $420K, I'm running my numbers at $380K. Optimism doesn't pay the bills — the market does.

Estimate the Rehab Budget

I walk every property with my contractor before making an offer. We break the rehab into three buckets:

Structural: Foundation, framing, roof. These are the expensive surprises. If the foundation needs work, I'm either renegotiating hard or walking away. On our Abbottsford project, what looked like a cosmetic flip turned into a $30K foundation repair that we caught during the walkthrough. That knowledge changed our offer by $40K.

Systems: HVAC, plumbing, electrical. These aren't glamorous, but they're where budgets blow up. A full HVAC replacement in Nashville runs $8-12K. Rewiring a 1,500 sq ft house is another $8-15K. I always check the electrical panel, run the water, and look at the ductwork.

Cosmetic: Kitchen, bathrooms, flooring, paint, fixtures. This is where the value is created. Buyers pay for kitchens and bathrooms. On our Alcott Drive project, we spent $85K on rehab, and about $40K of that was the kitchen and two bathroom renovations. That's where the ARV jumped.

After we estimate all three buckets, I add a 15-20% contingency. Always. I've never once come in under budget on a flip. The contingency isn't pessimism — it's acknowledging that you can't see inside walls until you open them up.

Calculate Your Maximum Offer

Here's the formula I use on every deal:

Maximum Allowable Offer = ARV × 70% − Rehab Cost

The 70% rule leaves room for closing costs on the buy side (1-2%), holding costs during renovation (2-4 months of insurance, taxes, loan payments), closing costs on the sell side (6-8% with agent commissions), and your profit margin.

Let's run real numbers. Say I'm looking at a property where:

• ARV (conservative): $380,000
• Rehab estimate: $75,000
• Contingency (20%): $15,000
• Total rehab: $90,000

MAO = $380,000 × 0.70 − $90,000 = $266,000 − $90,000 = $176,000

That's the most I'd pay. If the seller wants $200K, I'm either negotiating down or moving on. There are always more deals.

When do I deviate from the 70% rule? Rarely. But if it's a light cosmetic flip in a hot neighborhood where I know the house will sell in under 30 days, I might go to 75%. The faster the flip, the lower the holding costs, so there's a bit more margin. But I never go above 75%.

The Tools I Use

I run every potential deal through DealCheck before making an offer. It lets me plug in the ARV, rehab costs, purchase price, and financing terms, and it spits out the projected profit, cash-on-cash return, and ROI. I run three scenarios on every deal — best case, worst case, and most likely — and I only move forward if the worst case still makes money.

For comps, I pull data from the MLS through my agent and cross-reference with county property records. The county assessor's website is free and gives you recent sales, tax assessments, and property details. It's not as clean as MLS data, but it's a good sanity check.

I also keep a spreadsheet that tracks every deal I've analyzed — whether I bought it or not. Over time, that database becomes incredibly valuable. I can see what ARVs I estimated vs. what properties actually sold for. That feedback loop makes the estimates tighter with every deal.

Know When to Walk Away

This is the hardest part, and it's where most new flippers lose money. You find a beautiful old Craftsman with original hardwoods and a big front porch, and you start telling yourself stories about what it could be. You start rounding the rehab budget down and the ARV up.

Don't.

I've passed on more deals than I've done. That's not a failure — that's discipline. The deals I've lost money on were the ones where I let emotion override the spreadsheet.

Here are my hard walk-away rules:

• If the numbers only work with an optimistic ARV, I'm out
• If the foundation needs work and the seller won't budge on price, I'm out
• If the property has been on the market for 90+ days in a hot market, there's a reason — find it before you offer
• If I can't get my contractor to walk it before the offer deadline, I'm out

There's always another deal. Nashville has thousands of properties. The one that makes you money is the one where the math is boring and obvious — not the one that requires "creative" accounting to justify.

The Bottom Line

Profitable flipping isn't about finding hidden gems or having a sixth sense for real estate. It's about running the same disciplined analysis on every single deal and only pulling the trigger when the numbers leave room for things to go wrong — because they will.

Start with a conservative ARV. Walk the property with your contractor. Add a contingency. Apply the 70% rule. And be willing to walk away. That's it. That's the whole system.

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