BiggerPockets

Your question is a little vague. Have you invested alot of time in the deal?

Good to meet you...

As a flipper myself I believe your answer is dependent on exposure. If your flipping concurrent to buying then at the end of the day it doesn't matter as long as you're willing to kick the deal if you cant find a buyer before the COE...

With that said I like 52k or 25% of value which ever is larger because although I am always looking for the buyer I also know that that expectation is not reasonable all of the time.

Good house hunting

Michael

PS on shorts 52 is a little hard to come in those cases if you net 20k you should be happy...

Hi, this is another aspect of investing in real estate that, to me, is just another number crunching game that has little influence on a buy decision. If you just consider financial costs with respect to profit (and you don't know until it's sold) I don't even see this as being a goal.

As djjk1 and wheelhouse illuded, cosider the internal rate of return or manager's rate of return. factor in what your efforts are worth and the opportunity costs. Anything positive above your cost of capital is OK if there are other positive factors.

If you were seller financing the deal, when you figure your profit will make a difference too. What's your return on an option not taken three years down the road?

What's the value of your reputation in the community for putting a property on the tax role, making improvements in a neighborhood and improving values for adjacent properties? What's the value to your reputation in putting someone in their first home, getting them off assisted housing? How do you value these aspects of investing to a return on your investment in terms of dollars?
You can't!

If anyone says they only invest to x% on a deal, they have no idea what they are talking about. IMO. Your real ROI won't be known til the fat lady sings. Instead, go into a transaction with the goal of maximizing your investment to the extent possible at the time, if you do that, you'll be fine.

Don't count your chickens before they hatch! Bill

I think both ROI and profit need to be tailored to the specific investment. Would I accept a lower ROI and/or profit on an investment that only takes me a week of cleaning and painting and then wholesaling vs. a $30k rehab that spans 4 weeks? Absolutely.

For the typical kind of rehabs that I aim for I consider 20% a good ROI if it is aligned with the time, risk, hassle involved.

For flips, I am looking for at least 15k net profit. I am buying houses in the 50-120k price range. I don't much care what roi that is. I just know what I need to make to keep the business rolling. For wholesale, it doesn't matter if I am not funding with my own money. Making $500 bucks with no money spent is still an infinite return on investment.

Hi, I don't think we are all on the same page. The ROI is a historical performance ratio that measures the performance of an invetment. To look at it as a future required yield alone is not really relevant. To properly measure performance you need to compare the investment to an alternative investment or cost of capital, the cost of your money. That cost is not really the return you get from a bank on the account but rather the best use of funds in your business.

Your return OF investment seems to be more of what is considered here. Also, money borrowed is not free in an economic sence. Not only are there loan expenses but also the "value" of having amounts at risk. As an example, if you're in a project and the lender goes to receivership to FDIC, you will really get stuck with debt and will probably have a hard time obtaing other funds. We seem to always look at it from the bank's side of things, but they can "default" too, especially in these times. Your cost of capital is probably much higher than you think and without any bearing as to any expected price.

A good place to find financial terms, ratios and formulas is Investopedia dot com.

Sorry for the babbling, Brian got me started, it's his fault, LOL! Bill

Is a 50% ROI in 120 days high enough?

If your interested, we are currently looking for partners with $10,000 for the construction of new homes for the purpose of re-sale. Your funds would be fully secured by the real estate.

The profits allow for a 50% return on your investment from each house. Due to our aggressive pricing of the houses, the realtors we have consulted have each stated that they anticipate the houses could be sold within 30 days of completion, bringing the total investment time of each house from start to sale to 120 days.

We have several homes to build and therefore, we would also work with an investor / partner who would prefer to roll-over their $10,000 investment into the next house, and take out only their profit, therefore, after the second house is sold, the investor / partner has made a 100% return (all in less then one year).

Everything is documented, and we would welcome you to have your lawyer review the entire investment / partnership before you move forward.

Feel free to contact me for further details at:

gagedevelopments@yahoo.ca

Thank you