BiggerPockets

Since so many people just focus on wholesaling-I am just curious what is the average amount or percentage you can make when you do a rehab? I have heard people laughing about the TV shows like Flip That House because the profit wasn't realistic, so I'm just wondering what is?

Obviously you have to do your comps before you decide on a house to rehab. Whats the single factor that carries the most weight...Days on market in the area, the price, etc?

It is hard to say a range becauase it depends on so many factors including the price range of the houses you are rehabbing. In fact, in my limited experience we have seen a huge range ($12K for a quick townhouse rehab to the project we are working on now which will likely yield around $90K).

Our target is $40,000 on homes that arv for $180,000 to $400,000.

In 2008 I averaged $25k, average resale price was $69,900, average days owned was 100.

In 2009 I averaged $20k, average resale price was $69,000, average days owned still around 100. Reason for margin decay was appraisals.

In 2010 I averaged $15k, average resale price was $78,900, average days owned was around 130. We had to move up in area quality because the lower blue collar areas we were working in were getting hammered by appraisers. Problem was, everyone else was also working the areas we had to move in to. More competition on the buy side means we had to pay more for our inventory. Also because we were increasing our price points we had to increase the bells and whistles. Also, the extra 30 days hold time added about $1,000 in holding costs.

In 2011 I averaged $12k, average sale price $91,750, average hold time 160 days. Same issues as 2010, but even more competiton on the buy side. Tons of contractors are flipping here because they can't get work. They typically out-bid me by $15k. As such, they usually don't try for a second one because they can't make money at the prices they are paying. I'm hoping it thins out in 2012. Although lately I've been getting outbid by owner occupants (smartly) taking advantage of Homesteps and other similar programs.

We make an average of around $30k on houses valued around $110k-$140k, but we do a lot of work ourselves. I think that if we hired out all the labor we would make around $20k.

You need to have enough margin built in that if something goes wrong, you can still turn a profit. Set a realistic ARV and know your rehab costs.