Most Fall River flips die in the same place: someone fell in love with the building, then reverse-engineered a profit story to match the listing. Hard money does not care about your vision board. Neither does ARV.
This walkthrough uses Fortified’s free Flip Analyzer on a teaching example — a three-family-style South Coast multi-family at a $325,000 purchase, $75,000 rehab in the loan stack, plus additional out-of-loan work, hard money at 70% LTV / 12% / 2 points, and an ARV band of $475k–$520k. Numbers are instructional, not an appraisal of a specific street address. Photos are Fortified-owned Fall River multi-family stock for context.
Key flip terms (plain English)
Same job as our buy-and-hold post: define the money words so you (and answer engines) are not guessing. Definitions below match how the Flip Analyzer uses them.
ARV (after-repair value). What the property should be worth after the planned rehab, based on comps that match the finished condition — not what you “need” it to be to make the spreadsheet green. In the analyzer you enter an ARV low and high so profit is a range, not a single fantasy number. If the deal only works at the high ARV, you do not have a deal; you have a hope. On this teaching run the band is $475,000–$520,000.
Hard money loan (HML). Short-term acquisition/rehab financing, usually asset-based. You pay points at close, a high interest rate, and the lender limits loan-to-value (LTV) against purchase or basis. Interest accrues every month you hold. In this example: 70% LTV, 12% rate, 2 points → roughly a $285,600 loan against the modeled basis stack.
Points. Up-front lender fee expressed as a percent of the loan (here, 2%). Points increase cash to close even when the principal is high LTV. They are not free just because they are “in the deal.”
LTV (loan-to-value). Loan amount divided by the value basis the lender uses (often purchase or a capped basis). 70% LTV means you are bringing the other 30% plus costs the loan will not cover.
Total cost basis (HML basis). Purchase + rehab + closing/add’l costs rolled into the hard-money stack. It is not “what I offered.” In this run: $325,000 + $75,000 + $8,000 ≈ $408,000 basis before other out-of-loan cash.
Cash to close / adjusted cash to close. Equity gap below the loan, plus points paid up front, other up-front costs, and rehab you did not put in the loan, adjusted for any HELOC. This is the real check you write on day one — not the down-payment sound bite from a seminar.
Monthly carry cost. What it costs to own the project each month while unsold: hard-money (and HELOC) debt service plus taxes, insurance, utilities, and other holding costs. In this teaching run, about $3,964 per month. Carry is why slow flips die.
Holding period. Months from close to sold-and-closed. The analyzer maps profit across 2–16 month holds because every extra month burns carry.
Selling costs. Broker fee plus other closing costs as a percent of sale price (here 5% + 2% = 7%). Exit friction is not optional math.
Pre-tax gross profit (analyzer definition). Roughly: sale price − selling costs − HELOC payback − HML balance − holding costs − up-front cash (see the tool’s formula line). It is a planning grid, not your CPA’s final tax number.
HELOC (if used). Home-equity line layered on the project for extra rehab or liquidity. It has its own rate, payment, and payback at exit. This teaching run sets HELOC to $0 to keep the first pass clean.
The three-family stack we are modeling
| Input | Value |
|---|---|
| Asset type (teaching) | 3-family-style multi-family |
| Purchase | $325,000 |
| Rehab (in loan stack) | $75,000 |
| Closing / add’l in loan | $8,000 |
| Total cost basis (HML basis) | ~$408,000 |
| Hard money | 70% LTV · 12% · 2 pts → loan ~$285,600 |
| HML cash to close (gap) | ~$122,400 before other up-front / out-of-loan rehab |
| Other up-front + rehab not in loan | $3,000 + $10,000 |
| Monthly carry | ~$3,964 / mo in this run |
| ARV band | $475,000 – $520,000 |
| Selling costs | 5% broker + 2% other = 7% |
Run the same stack yourself: Flip Analyzer. Change one input and watch profit and cash-in matrices move.
Profit is a matrix, not a vibe
In this teaching run, pre-tax gross profit at the low ARV is thin or negative once you stretch the hold. At roughly $500,000 ARV and a 6-month hold, the profit grid showed about $14,500 pre-tax gross — before paint overages and buyer credits. Stretch toward 10–12 months at the same ARV and carry eats the deal. That is the whole lesson: speed and exit price are partners.
South Coast honesty checks
- ARV is a range. Model low and high. High-only deals are hopes.
- Hold cost is a weapon against you. At ~$4k/month carry, delay is expensive.
- Rehab not in the loan is still cash. Track it or you understate cash in.
- Selling costs are real. 7% exit friction in this model is intentional conservatism.
- The best flip is sometimes the pass. Same rule as buy-and-hold and DSCR: numbers first.
Related Fortified tools
- Flip Analyzer (this post)
- Flip → BRRRR Analyzer — when you might hold instead of sell
- Buy & Hold underwriting
- DSCR explained
- Cap rate vs NOI
Questions on a live Fall River file: (508) 671-7228.
Definitions and flip FAQs
These are the questions investors and answer engines ask when underwriting a fix-and-flip. Answers match the definitions above and the live teaching example.
What is ARV on a flip?
ARV (after-repair value) is the estimated market value of the property after the planned renovation, supported by comparable sales in similar condition. It is not purchase price plus rehab, and it is not the number that makes your profit target work. In Fortified’s Flip Analyzer you enter ARV low and high so profit is stress-tested across a band. On this Fall River three-family-style teaching example, the band is $475,000–$520,000. If only the top of the band produces acceptable profit, the bid is too aggressive.
What is hard money and how is it different from a bank mortgage?
Hard money is short-term, asset-based financing used to acquire and rehab. It typically charges points at closing, a higher interest rate than permanent mortgages, and underwrites more to value and exit than to your W-2. Interest accrues monthly during the hold. A conventional or DSCR rental mortgage is usually longer-term, lower rate, and meant for stabilized holds — not a six-month paint cycle.
What does LTV mean on a hard money flip loan?
LTV (loan-to-value) is the loan divided by the value basis the lender allows. At 70% LTV you finance seventy cents on the dollar of that basis and bring the rest in cash (plus points and uncovered costs). Higher LTV reduces cash to close but can increase points, rate, and risk if ARV slips.
What is cash to close on a flip?
Cash to close is the money required at acquisition beyond the hard money advance: the equity gap below LTV, points paid up front, other up-front costs, and rehab not included in the loan, adjusted for any HELOC. In this teaching run the HML gap alone is about $122,400 before the extra $13,000 of other up-front and out-of-loan rehab.
What is monthly carry cost?
Monthly carry is the all-in cost to hold the project each month while it is unsold: hard money interest (and HELOC if any), property taxes, insurance, utilities, and other holding costs. This teaching example lands near $3,964 per month. Multiply by months held to see why a “quick flip” that becomes a fourteen-month odyssey destroys profit.
How do you calculate flip profit in the analyzer?
The Flip Analyzer’s pre-tax gross profit grid follows its on-screen formula: sale price, minus selling costs, minus HELOC payback, minus hard money balance, minus holding costs, minus up-front cash — mapped across ARV levels and hold months. Use it as a decision grid. Final taxable profit still needs your CPA, depreciation, and actual settlement statements.
What selling costs should I assume in Fall River?
At minimum, model broker compensation and other closing costs as a percent of sale price. This teaching run uses 5% broker + 2% other = 7% all-in exit friction. Underestimating exit costs is how thin deals look fat on napkin math.
What is a good profit target on a Fall River flip?
There is no universal number. Require acceptable profit at the low ARV and a realistic hold, not only at the high ARV and a perfect 60-day exit. In this sample, roughly $14,500 pre-tax gross at ~$500k ARV and six months is a workable-but-tight illustration — not a promise and not enough margin for a sloppy rehab.
Why does a longer hold destroy flip returns?
Because carry compounds against you every month: hard money interest plus taxes, insurance, utilities, and other holding costs. The profit matrix makes that visible. Schedule risk is financial risk.
Should I flip or BRRRR the building instead?
If stabilized rents and a refinance produce acceptable DSCR and cash flow, holding via BRRRR may beat a thin flip. Model the exit sale in the Flip Analyzer and the hold/refi path in the BRRRR analyzer before you bid. Do not decide from slogans.
Educational teaching example using Fortified’s Flip Analyzer. Not an offer, appraisal, or guarantee of profit. Verify all inputs with your lender, contractor, and comps.