I look at 30-40 potential flips a week. If I drove out to every one of them, I would never close a deal. So I built a 15-minute flip underwriting process that tells me whether a deal is worth my time before I burn gas on it. I am a licensed GC, a licensed Illinois real estate agent, and an active investor. This is exactly how I run the math on a property before I will agree to walk it.
If you are a new investor, or you are working with a contractor and you want to know how the experienced guys think, this is the playbook.
Step 1: ARV in Three Minutes
ARV is after-repair value. Everything in flip underwriting hinges on this number. If you get it wrong, you lose. If you get it right, the rest is arithmetic.
My process:
- Pull the MLS for the subject property’s zip code, last 90 days, sold only
- Filter to homes within 200 square feet of the subject
- Same number of bedrooms and bathrooms
- Sort by list-to-sold ratio and date
- Pick the 3 to 5 most recent comps that are renovated to a level I would match
- Average the price-per-square-foot and multiply by my subject’s square footage
I do not use Zillow Zestimate. I do not use Redfin estimate. I use closed comps in the actual MLS. If you do not have MLS access, work with an agent who does. If you are working alone, sold prices on Redfin and Zillow are accurate, but the comp picks they suggest are usually wrong.
Step 2: Reno Budget in Five Minutes
I have run hundreds of jobs in DuPage County and I know what stuff costs. You should know your number per square foot for your market and your finish level.
My current 2026 numbers for a standard suburban Chicago flip:
- Light cosmetic (paint, carpet, fixtures): $20-30/sqft
- Standard flip (kitchen, baths, flooring, paint, lighting): $45-65/sqft
- Heavy flip (full gut, layout changes, mechanicals): $80-120/sqft
- Add for roof replacement: $9,000-15,000
- Add for furnace and AC: $8,000-12,000
- Add for new windows (whole house): $12,000-25,000
- Add for foundation issue: $5,000-30,000+ (walk away unless ARV is huge)
For 15-minute underwriting, I assume worst-case scope unless the listing photos prove otherwise. Better to walk away from a real deal than buy a money pit because I assumed best-case.
Step 3: The 70% Rule (With My Adjustment)
The classic flipper’s formula:
Maximum Allowable Offer (MAO) = (ARV × 70%) – Reno Budget
I run a tighter version because I am also paying for the agent commission, holding costs, and closing on both ends. My adjusted version:
MAO = (ARV × 0.72) – Reno – $20,000 carry/transactional
That $20K covers:
- 3-6 months of holding (taxes, insurance, utilities, lender interest)
- Both closings (purchase and sale)
- Realtor commissions on the sell side
- Staging and final touch-ups
If the math says I can offer $185,000, I shoot for $175,000 and have room to negotiate up. If the asking price is already over my MAO, I do not even drive out to it. That alone has saved me hundreds of hours.
Step 4: Quick Sanity Checks
Before I move on the deal, I run four gut-checks:
- Days on market. Has it been sitting more than 30 days? There is probably a reason. Find it before you buy.
- Tax history. Did the seller buy it for $50K in 2008? Their basis is low, they might be flexible on price. Or they bought 6 months ago and are flipping to me at a markup. Both matter.
- Permit history. Pull the village permits. Open permits are a red flag. No permits on a “fully renovated” listing is also a red flag.
- Neighborhood comps trending. Are recent sales going up or down? You want flat-to-up, never declining.
Step 5: Decide in 60 Seconds
At the end of 15 minutes I have one of three answers:
- Pass. The math does not work. Move on.
- Walk it. Worth a site visit. Schedule.
- Aggressive offer. Numbers say there is meat on the bone. Make an offer with limited contingencies and a fast close to win against other investors.
Most deals are passes. That is fine. The job of a real estate investor is to say no efficiently. I have written more about that mentality in my piece on Chicago real estate investor mindset.
Why Speed Matters in 2026
The good deals in DuPage County are getting picked up in 24-48 hours. If you cannot underwrite in 15 minutes, you are too slow. The investors who win are the ones who have the math memorized and can act before the listing agent has even returned the second showing call.
If you do not have a contractor on speed-dial to verify your reno budget, you are flying blind. Build that relationship before you need it. Ours runs a one-stop renovate-and-list operation through Fix-N-List, but any honest contractor with flip experience will give you reasonable feedback if you treat them right and pay them for the time.
FAQ
What is the 70% rule in real estate flipping?
The 70% rule says you should not pay more than 70% of after-repair value (ARV) minus your renovation budget. It builds in profit, holding costs, and risk margin.
How accurate does my ARV estimate need to be?
Within 5%. ARV is the foundation of every flip number. If your ARV is off by 10%, your profit is gone or doubled. Use closed MLS comps, not online estimates.
What renovation budget should I assume on a flip?
For a standard suburban Chicago flip in 2026, plan $45-65 per square foot. Add for roof, mechanicals, and major systems. Always pad 15-20%.
Should I underwrite a flip without seeing the property?
Yes for the first pass. The point of 15-minute underwriting is to filter. Walk the property only after the math says it might work. Save your time.
How many flip deals should I analyze before I find a good one?
In a normal 2026 DuPage County market, expect to underwrite 30-50 deals to find one that pencils, then 5-10 of those to result in an accepted offer. Volume is the game.
Want to Compare Notes on a Deal?
If you are looking at a property in DuPage County or anywhere in the Chicago suburbs and you want a contractor’s eyes on the math before you offer, send me the address. I will run the same 15-minute process on your deal and tell you what I would do.
Call (630) 534-0866 or reach me through timwangler.com/contact. Licensed Illinois GC, licensed real estate agent, active investor. Honest answers, no sales pitch.