One of the most common mistakes new fix-and-flip investors make is falling in love with a property before they’ve run the numbers. The deal feels right, the neighborhood seems strong, and then they submit a contract — only to find out later that the rehab cost more than expected, the ARV didn’t hold, and the margin wasn’t there. The antidote is simple: run the deal analysis before you make the offer, not after.
This post walks through the key metrics every fix-and-flip investor needs to calculate, and how to use them to make a fast, informed go/no-go decision on any DMV property.
The five numbers that determine if a deal works
1. After-Repair Value (ARV)
ARV is what the property will sell for after renovation, in its fully finished state. This is the single most important number in any fix-and-flip deal — and the one that’s most often estimated incorrectly by new investors. ARV must be based on recent comparable sales of renovated properties in the same sub-market (same neighborhood, same property type, same finish level), ideally from the past 3 to 6 months.
In the DMV, sub-market specificity matters enormously. A renovated cape cod in Springfield, VA has a fundamentally different ARV than the same size home in Vienna or McLean — even though they’re all in Fairfax County. Pull your comps from the same neighborhood, not just the same zip code.
2. Purchase Price
The price you pay to acquire the property. In Northern Virginia, DC, and Maryland, acquisition prices for flip candidates vary enormously by sub-market. Entry-level flips in Prince William County might start at $200,000–$280,000. High-value flips in Arlington or McLean might start at $500,000–$700,000. Your purchase price should leave enough room for rehab, financing, carrying costs, selling costs, and profit.
3. Rehab Budget
The total cost to bring the property to finished, market-ready condition. This includes all materials, labor, permits, and a contingency buffer (typically 10%–15%). Be realistic — the most common mistake is underestimating the rehab budget. In the DMV, full kitchen renovations typically run $25,000–$45,000 depending on size and finish level. Primary bath renovations run $12,000–$22,000. Flooring throughout a 1,500–2,000 sq ft home runs $8,000–$15,000. Add HVAC, plumbing, electrical, roofing, and exterior work as needed.
4. Carrying Costs
The costs you pay during the hold period: loan interest, property taxes, insurance, and utilities. For a hard money loan at a 6-month hold, carrying costs typically add 4%–6% of the loan amount. If your loan is $400,000 at a 6-month hold, budget $16,000–$24,000 in carrying costs. Longer holds = higher carrying costs = lower net profit.
5. Selling Costs
Real estate agent commissions (typically 5%–6% of sale price), transfer taxes, title fees, and closing costs on the sell side. In Northern Virginia and DC, budget 7%–9% of the ARV for total selling costs. On a $600,000 ARV deal, that’s $42,000–$54,000 coming off the top before you see your profit.
The deal math in action
Here’s a representative Northern Virginia deal calculation:
Property: 3BR/2BA ranch home in Springfield, VA
ARV: $600,000 (supported by 3 recent renovated comps in the same neighborhood)
Purchase price: $330,000
Rehab budget: $85,000
Total project cost: $415,000
WCLD hard money loan: 75% of project cost = $311,250
Carrying costs (6 months): ~$18,000
Selling costs (8% of ARV): ~$48,000
Total all-in cost: $415,000 + $18,000 + $48,000 = $481,000
Gross profit: $600,000 − $481,000 = $119,000
Net profit (after loan fees/points): approximately $100,000–$110,000
That’s a deal worth doing. The key was running these numbers before making the offer, not after going under contract.
The Maximum Allowable Offer formula
The Maximum Allowable Offer (MAO) formula gives you the highest price you can pay and still hit your target profit:
MAO = (ARV × 0.70) − Rehab Budget
The 70% factor builds in roughly 8–10% for selling costs and 4–6% for carrying costs, leaving your target profit in the 10–18% range depending on the specific deal. Use this as a quick screen — if you can’t buy the property at or below the MAO, the deal doesn’t work at that purchase price.
For the Springfield example above: MAO = ($600,000 × 0.70) − $85,000 = $420,000 − $85,000 = $335,000. The $330,000 purchase price fits under the MAO — the deal works.
Use the WCLD Deal Analysis Calculator
The WCLD Deal Analysis Calculator on this site lets you run all five numbers quickly and see your estimated profit, ROI, and whether the deal meets standard underwriting thresholds. Run it before you make any offer on a Northern Virginia, DC, or Maryland property.
Once you’ve run the numbers and the deal looks solid, call WCLD at 703-350-4339 to discuss the loan structure. Have your ARV, purchase price, and rehab budget ready — that’s the starting point for every conversation.