House flipper CFO services: profit is made at the offer and lost in the middle

Max-offer math: the 70% rule breaks at the border

The common shortcut — offer 70% of after-repair value minus repair costs — quietly assumes a local flipper's cost stack, and a Canadian flipper's stack is taller. Flip profits are business income, not capital gains, in both countries, and the cross-border overhead is real money on every deal. The fix is a bottom-up maximum offer built from your actual costs, refreshed for every property.

As an illustration only: on a US$300,000 after-repair value with US$40,000 of repairs, the 70% shortcut says offer US$170,000 — before FX costs, USD interest carry, or cross-border compliance touch the number. We rebuild that figure bottom-up so the maximum offer already contains every landed cost, and walking away stays cheap.

Draw and budget controls keep the rehab from eating the margin

Rehab overruns are rarely one disaster; they are twenty small yeses nobody priced. The control set is short and non-negotiable.

• Milestone draws: money releases against completed, verified stages — never against time or promises.
• A change-order log: every scope change gets a cost and a margin impact before it is approved, so running profit stays visible.
• Budget-versus-actual, weekly: a fifteen-minute review while a variance is still a few hundred dollars.
• A contingency policy: who may spend it, on what, and what happens when it is gone.

Because flips are inventory, every receipt also has a second job: building the cost base both tax authorities will accept. Clean job-cost books during the project beat reconstruction at filing time, every time.

Lender packaging: professional borrowers get faster yeses

Hard-money and private lenders price uncertainty, and a Canadian borrower starts with extra of it — a thin US credit file, foreign income, an unfamiliar structure. The counter is a lender package we build once and keep current: a track record sheet showing purchase, budget, sale, and days held for each completed deal; a deal-level pro forma in the lender's own format; entity documents; and a stated exit plan with a backup.

Structure deserves a hard look before the first wire. Many Canadians reflexively form a US LLC, but the CRA treats an LLC as a corporation, which routinely misaligns foreign tax credits and produces double tax for Canadian owners. The structures that actually fit are covered on our US house flipping tax for Canadians page — settle this before the lender papers the loan, not after.

Pipeline versus capacity: the deals you skip fund the ones you finish

Capacity is the minimum of three supplies — cash, crew, and your oversight hours — and a pipeline bigger than the smallest of them erodes margin on every active project at once. Our working rules are blunt: no new contract if committed rehab budgets would exceed available liquidity plus confirmed credit; one active project per crew lead; and honest accounting for the oversight tax of managing from another country.

Currency adds a fourth supply domestic flippers never think about: money still sitting in Canadian dollars is not deployable on Monday. We keep a USD war chest sized to your pipeline, so a good deal never waits on a wire and an exchange rate.

From flips to holds: deciding which one to keep

The keep signal is specific: a finished property whose refinance appraisal returns most of your cash and still cash-flows at the foreign-national DSCR terms you can actually get. When that lines up, a kept door starts compounding instead of restarting your capital every few months.

Decide intent early, because tax character follows it. A flip is inventory taxed as business income; a hold is capital property; and both the IRS and the CRA look skeptically at intent that changes only after a house will not sell. When holds become the plan, the strategy shifts to the questions on our US rental owner CFO services page — return on equity, FX policy, and the systems that scale.