Fix & Flip

You know the buy price and the sell price. The hundreds of costs in between are where flippers lose track of what each deal actually made.

The Industry

A flipper buys a property for $180,000, puts $55,000 into the renovation, and sells it for $295,000. Gross profit looks like $60,000. But then you add up the hard money loan at 10% over seven months, the property taxes during the hold period, the insurance, the utilities, the dump fees, the permits, the staging, the real estate commissions on the sale, and the closing costs on both ends. The actual profit was $28,000. That’s still a good deal. But if the renovation had taken nine months instead of seven, it might have been $22,000. The difference between what a flip looks like it made and what it actually made is usually significant.

Flipping is a transaction-heavy business. A single deal might have 150 or 200 separate expenses between purchase and sale. Materials at three different hardware stores. Contractor draws. Permit fees. Dump runs. Interest payments. Utility bills. Most of those hit during a period when nothing is coming in. Then you sell, deposit a check, and try to remember what you actually spent. If you’re running three or four projects at once, the tracking gets messy fast.

Who This Covers

Fix and flip investors buying distressed properties, renovating, and reselling. From operators doing a handful of deals per year to those running a steady pipeline of projects at any given time. Single flips or multiple projects across markets.

What Makes It Complex

Every property is its own project with its own cost structure. Acquisition costs, rehab costs, holding costs, and selling costs all need to be tracked to the specific deal. Cash goes out for months before the sale. One missed category can swing your profit calculation by thousands.

What We Handle

We set up your books so every expense gets coded to the project it belongs to. Acquisition costs like purchase price, closing costs, and title fees. Rehab costs like contractor draws, materials, and permits. Holding costs like loan interest, property taxes, insurance, and utilities. Selling costs like agent commissions, staging, and closing costs. When the deal closes, you have a complete picture of what went in and what came out.

We also handle the tax side properly. Flipping typically makes you a dealer in the eyes of the IRS, which means ordinary income treatment and self-employment tax on your profits. No long-term capital gains. That changes the math on what you actually keep. The firm’s in-house CPA prepares the returns and handles the quarterly estimates so April is not a surprise.

Project-Level Accounting

Every dollar tracked to the deal it belongs to. Full cost accounting from purchase through sale. Reports that show true profit per flip after every holding cost, closing cost, and carrying charge is accounted for. Not just gross margin, but actual net return.

Tax Planning and Filing

Flipping income is typically ordinary income subject to self-employment tax. We handle quarterly estimates so you’re setting aside the right amount throughout the year. Returns prepared by the firm’s in-house CPA who understands real estate dealer status and the implications for your tax situation.

What Goes Wrong

The most common problem is costs that never get assigned to a project. You pay for materials on a personal card. You give a handyman cash. The interest on your line of credit gets expensed as a general business cost instead of allocated to the property using those funds. The dump fees, the mileage, the permit applications, and the utility payments slip through. By the time you sell, you’ve forgotten half the costs that should have been tracked to that deal. Your profit number is inflated and you don’t realize it.

The other issue is taxes. Flippers who do more than a few deals per year are almost certainly dealers, not investors. That means profits are ordinary income, not capital gains, and they’re subject to self-employment tax on top of your regular rate. If you’re not planning for this with quarterly estimates, you end up owing a significant amount in April with nothing set aside to cover it. It catches a lot of flippers off guard.

Costs That Disappear

Small purchases add up. The trip to the hardware store, the dump fee, the lockbox, the permit application, the two months of utilities. If they’re not tracked to the project, your profit calculation is wrong. You might think you made $35,000 when you made $24,000. That error compounds across deals.

Tax Surprises

Dealer status means ordinary income plus self-employment tax on profits. A $40,000 flip profit might owe $14,000 or more in combined taxes. Without quarterly estimates throughout the year, you end up with a bill you weren’t expecting. Planning prevents April from becoming a problem.

What Changes

You know exactly what each deal made. Not the rough number in your head, but the actual profit after every cost is accounted for. That clarity changes how you evaluate opportunities. You can see which neighborhoods, price points, and renovation scopes actually make money and which ones look good on paper but don’t perform after the holding costs and surprises add up. Your next deal gets evaluated against real data from your last ten.

The books are always current. When a lender asks for financials, they’re ready. When you’re deciding whether to take on another project, you can see your cash position and what’s already committed to properties in progress. When tax time comes, everything is organized and the estimates have been handled all year. You stop guessing and start running flipping like a real business.

Better Deal Selection

Historical data shows which deals actually perform. You can see that three-bedroom ranches in a certain zip code consistently hit 18% net margin while larger renovation projects in another area barely break even. You make buying decisions based on what actually worked, not what felt right.

Confidence to Scale

Clean books and clear project tracking let you run more deals at once without losing control of the numbers. You know your cash position, your committed capital, and your expected timeline on every active project. Growth becomes sustainable because you can see what’s happening across the whole operation.

Boutique Real Estate Accounting Firm