How to work out your maximum offer on a flip

Every flip I have ever seen go wrong went wrong at the same moment: the offer. Not the reno, not the sale, the offer. You can run a tidy renovation and sell into a decent market and still lose money, because the day you signed the contract you paid a price the deal could never carry. So the single most important number in a flip is not the resale price or the reno budget. It is your maximum offer: the most you can pay and still make the profit that justifies the risk.

Most people work this the wrong way round. They find a house they like, decide what they are "comfortable" paying, and hope the numbers work out at the end. A maximum offer is the opposite. You start at the finished value and subtract your way back to a price. Everything in between is arithmetic, and the arithmetic sets a ceiling you do not cross, no matter how much you like the kitchen you are imagining.

Why your maximum offer is the only number that matters

A flip has one hard rule that separates it from almost every other property play: you make your money when you buy, not when you sell. The resale price is largely set by the suburb and the market, and you do not control either. The reno spend is mostly fixed by the scope the house needs. The one number you actually control is the price you pay, and it is the one that decides whether there is a profit at all.

That is why I set the maximum offer before I inspect, before I fall for the place, before an agent starts working on me. A number set in advance, from the numbers, is a number you can hold. A number you reach for in the moment is just the auction talking. If you want the longer version of why buying discipline beats renovating skill, I wrote up what makes a good flip property separately, but it all comes back to this ceiling.

Start at the end: the realistic resale price

Your maximum offer is built backwards from the after-repair value, the ARV. This is the price the finished, renovated house will actually sell for, and "actually" is the whole game. Not the optimistic number the selling agent floats to win your business. Not the one dreamer's sale from twelve months ago. The realistic number, backed by recent comparable sales of renovated homes on similar streets.

Get the ARV wrong on the high side and every number below it is wrong too, which is why I treat it as the input to defend hardest. Pull three or four genuinely comparable sales, renovated homes of the same type and size nearby that sold recently, and take the sober middle, not the top. If you cannot find comparable sales to support the resale price, you do not have an ARV, you have a wish. For a worked one, the sample analysis shows how the finished value drives the whole model.

Say the honest ARV on the house in front of you is $760,000. That is where we start.

Work backwards: subtract every cost the deal will take

Now subtract everything between that resale price and the money in your pocket. There are four buckets, and beginners forget at least two of them.

• Selling costs. Agent commission around 2.5% on a $760,000 sale is about $19,000, plus marketing and styling. Call it $23,000.
• Holding costs. Loan interest on both drawdowns, rates, water, insurance and utilities across the months you own it. On a five-month hold, roughly $16,000 here. Model yours with the holding cost calculator, because time is the driver people underestimate.
• Renovation. The scope the house needs, priced honestly. A cosmetic-plus job against the Archicentre Australia CostGuide (2026) band of roughly $1,600 to $3,900 per square metre lands around $70,000 on a typical dated three-bedder. Price your own with the renovation cost calculator.
• Buying costs. Stamp duty is the big one and it scales with the price. On a mid-$500,000s buy in NSW, transfer duty runs about $20,000 under the Revenue NSW 2026–27 schedule ($11,602 plus $4.50 for every $100 over $387,000), plus conveyancing of $1,200 to $3,500 and a building and pest report at $400 to $800. Call the buying block $23,000. Check yours with the stamp duty calculator.

There is a small circularity here: stamp duty depends on the purchase price, which is the number we are solving for. I handle it the way it works in practice. Estimate the buying costs at roughly the price you expect to land on, get a maximum offer, then re-check the duty against that figure and adjust once. It moves the answer by a few thousand dollars, not tens of thousands.

Decide your margin before you subtract it, not after

Here is the discipline most people skip. Your profit is not what happens to be left over at the end. It is a cost you build into the calculation from the start, the same as stamp duty or the reno.

Decide the number that makes the risk worth it before you subtract anything, and treat it as non-negotiable. On a deal turning over three-quarters of a million dollars, I want a pre-tax margin that survives a blown reno and a slow sale, so let us set $50,000. A purpose-bought renovation-for-resale will commonly put the profit on revenue account rather than capital account, although the actual treatment depends on your intention and circumstances. At a 37% marginal rate, before considering Medicare levy or other tax effects, that $50,000 pre-tax is roughly $31,500 after income tax. If that after-tax number does not clear your threshold, the margin is too thin before you have paid a cent. There is more on setting that threshold in how much profit you should make on a flip.

The worked maximum offer, from the ground up

Put it together and the maximum offer falls straight out:

So on this deal, $578,000 is the wall. At $578,000 the numbers deliver the margin I set. At $600,000 that margin is more than halved, because I pay more duty, carry more interest and the profit I promised myself has quietly become the vendor's. At $620,000 only a thin pre-tax margin is left before any overrun. Nothing about the house changed between those prices. Only the arithmetic did, and the arithmetic is the deal.

The 70% rule is a shortcut, not the calculation

If you have read about flipping you will have met the 70% rule, the American shorthand that says pay no more than 70% of the ARV minus the reno. It is a fine sniff test for whether a deal is worth modelling. It is a poor substitute for the model, because it buries stamp duty, agent commission, holding and the income-tax treatment of a flip inside one blunt percentage, and in high-duty Australian states that buffer is thinner than it looks. I pulled it apart in why the 70% rule breaks in Australia. Use it to decide what to spend an hour on. Use the backwards calculation above to decide what to offer.

Run your own maximum offer

The method matters more than my numbers, because your ARV, your reno scope and your holding period will all be different. Start at the honest resale price, subtract selling, holding, reno and buying costs, subtract the margin you decided in advance, and whatever is left is the most you can pay. Write it down before the inspection and do not move it in the room.

That backwards calculation is what FlipPro models on a real listing: paste the URL, review the renovation scope and cost assumptions, and use the resulting maximum offer and deal score as a decision brief. See the Full Analysis, score a deal against every strategy with the feasibility tool, or check the pricing and set your ceiling on the next one before you sign. The best offer you ever make is the one you were disciplined enough to walk away from.

This is general information only and not financial, tax, legal or town-planning advice. The figures above are an illustrative worked example, not a specific listing or a specific customer's analysis. Stamp duty, renovation, holding and selling costs change and vary by state, site and timeline, and tax treatment depends on your circumstances. Figures are indicative ranges from sources current at the time of writing. Do your own due diligence and get professional advice before you commit.

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