Director of Underwriting
January 2026
Learn the fundamentals of deal analysis for house flipping, including how to accurately estimate after-repair value and calculate maximum allowable offer.
In real estate investing, your profit is made when you buy—not when you sell. Overpay for a property, and no amount of renovation expertise or market timing will save you. Accurate underwriting is what separates profitable investors from those who learn expensive lessons.
This guide breaks down the core components of fix-and-flip deal analysis: determining After-Repair Value (ARV), estimating repair costs, and calculating your Maximum Allowable Offer (MAO) to ensure profitability.
ARV is what the property will sell for after renovations are complete. It’s the foundation of your entire analysis—get this wrong, and everything else falls apart.
Start by identifying 3-5 recently sold properties that are similar to what your subject property will become after renovation. The best comps share these characteristics:
No comp is perfect. You’ll need to adjust for differences. Common adjustments include:
After adjustments, your comps should cluster around a central value. If they’re wildly disparate, you need better comps or a deeper understanding of sub-market differences.
Repair estimation is where inexperienced investors lose money. The goal isn’t perfection—it’s being close enough that your deal remains profitable even if surprises arise.
Walk the property systematically, documenting every repair needed. Organize by category:
For each item, you have several estimation approaches:
| Category | Estimate |
|———-|———-|
| Exterior Paint | $4,500 |
| New Roof | $8,000 |
| Interior Paint | $4,000 |
| LVP Flooring | $6,000 |
| Kitchen Update | $12,000 |
| Bathroom Updates (2) | $8,000 |
| New HVAC | $6,500 |
| Electrical Updates | $2,500 |
| Landscaping | $2,500 |
| Contingency (10%) | $5,400 |
| **Total** | **$59,400** |
Even experienced investors encounter surprises: hidden water damage, outdated electrical that doesn’t pass inspection, foundation issues invisible until demo. Build 10-15% contingency into every estimate.
The 70% rule provides a quick calculation framework: never pay more than 70% of ARV minus repairs. This margin accounts for holding costs, selling costs, and profit.
At a $185,000 purchase price, your all-in investment is $245,000, leaving $105,000 gross margin. After holding costs ($8-12K), selling costs ($25-30K at 7-8% of ARV), and closing costs ($5-8K), you’re targeting $60-70K profit.
The 70% rule is a starting point, not gospel. Adjust based on:
Serious investors build detailed pro formas for every deal. Include:
Net Profit = ARV – (Acquisition + Renovation + Holding + Selling Costs)
Target a minimum 15% ROI on total capital deployed, or $30K+ absolute profit, whichever is higher.
Learn to recognize these deal-killers early:
Accurate underwriting protects your capital and ensures consistent profitability. Master ARV determination through rigorous comp analysis. Build repair estimates systematically with appropriate contingency. Use the 70% rule as your starting framework, adjusting based on market conditions and deal specifics. Every successful flip starts with numbers that work—verify them before you ever make an offer.
Join our network of verified investors and get access to off-market deals.
Director of Underwriting
January 2026
Learn the fundamentals of deal analysis for house flipping, including how to accurately estimate after-repair value and calculate maximum allowable offer.
In real estate investing, your profit is made when you buy—not when you sell. Overpay for a property, and no amount of renovation expertise or market timing will save you. Accurate underwriting is what separates profitable investors from those who learn expensive lessons.
This guide breaks down the core components of fix-and-flip deal analysis: determining After-Repair Value (ARV), estimating repair costs, and calculating your Maximum Allowable Offer (MAO) to ensure profitability.
ARV is what the property will sell for after renovations are complete. It’s the foundation of your entire analysis—get this wrong, and everything else falls apart.
Start by identifying 3-5 recently sold properties that are similar to what your subject property will become after renovation. The best comps share these characteristics:
No comp is perfect. You’ll need to adjust for differences. Common adjustments include:
After adjustments, your comps should cluster around a central value. If they’re wildly disparate, you need better comps or a deeper understanding of sub-market differences.
Repair estimation is where inexperienced investors lose money. The goal isn’t perfection—it’s being close enough that your deal remains profitable even if surprises arise.
Walk the property systematically, documenting every repair needed. Organize by category:
For each item, you have several estimation approaches:
| Category | Estimate |
|———-|———-|
| Exterior Paint | $4,500 |
| New Roof | $8,000 |
| Interior Paint | $4,000 |
| LVP Flooring | $6,000 |
| Kitchen Update | $12,000 |
| Bathroom Updates (2) | $8,000 |
| New HVAC | $6,500 |
| Electrical Updates | $2,500 |
| Landscaping | $2,500 |
| Contingency (10%) | $5,400 |
| **Total** | **$59,400** |
Even experienced investors encounter surprises: hidden water damage, outdated electrical that doesn’t pass inspection, foundation issues invisible until demo. Build 10-15% contingency into every estimate.
The 70% rule provides a quick calculation framework: never pay more than 70% of ARV minus repairs. This margin accounts for holding costs, selling costs, and profit.
At a $185,000 purchase price, your all-in investment is $245,000, leaving $105,000 gross margin. After holding costs ($8-12K), selling costs ($25-30K at 7-8% of ARV), and closing costs ($5-8K), you’re targeting $60-70K profit.
The 70% rule is a starting point, not gospel. Adjust based on:
Serious investors build detailed pro formas for every deal. Include:
Net Profit = ARV – (Acquisition + Renovation + Holding + Selling Costs)
Target a minimum 15% ROI on total capital deployed, or $30K+ absolute profit, whichever is higher.
Learn to recognize these deal-killers early:
Accurate underwriting protects your capital and ensures consistent profitability. Master ARV determination through rigorous comp analysis. Build repair estimates systematically with appropriate contingency. Use the 70% rule as your starting framework, adjusting based on market conditions and deal specifics. Every successful flip starts with numbers that work—verify them before you ever make an offer.
Join our network of verified investors and get access to off-market deals.
