A common mistake among first-time flippers is they numbers the same wrong way: they take the purchase price, add renovation costs, and compare that to the ARV (after-repair value). If there's a gap, they think they've found a deal.

They haven't. That math misses three things that quietly eat your profit:

1. Holding costs. Every month you own the property before it sells, you're paying the loan, taxes, insurance, and utilities. On a 6-month flip with hard money at 10-12%, that's often $3-6k you forgot to budget for.

2. Selling costs. Agent commissions, closing costs, and staging typically run 8-10% of the ARV. On a $300k resale, that's $24-30k gone before you see a dime.

3. The contingency buffer. If your rehab budget doesn't have a 10-15% cushion for surprises (and there are always surprises — old houses hide things), you're one bad inspection away from breaking even.

The real formula: ARV − (Purchase Price + Rehab + Holding Costs + Selling Costs + Contingency) = actual profit.

Run that number before you make an offer, not after. Most "deals" that look good on paper fail this test — and that's exactly why so many first flips lose money instead of making it.

I built Cash Flow Academy to teach the deal analysis process properly, from the first walkthrough to the closing table. If you're working on your first flip and want a second set of eyes on your numbers, come find me.