Whats the minimum net to do a Flip?
What is the least amount of money I should net when doing a Flip?
I was thinking around $30k to leave room for surprises and changes in the market?
I wouldn't look at it from a flat number, but more of a percentage. As homes get more expensive, so does your risk if the market flips. As an agent, with the market constantly changing, I'd say at minimum 10% of the ARV.
Best of luck!
Quote from @Carlos Garcia:
What is the least amount of money I should net when doing a Flip?
I was thinking around $30k to leave room for surprises and changes in the market?
Changes with everyone. For some people, $30,000 is a lot of money. Others won't touch a property that produces less than $100,000 profit. It also depends on how much you've invested. It wouldn't make sense to invest $3,000,000 in a property that only earns $30,000 in profit. And what about margins? If the market drops 10% on a $100,000 home, you will only earn $20,000 profit. If the market drops 10% on a $500,000 home, you will lose $20,000.
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Do you want to net 30k on a million dollar flip? I suggest 20%
Minimum 10%. I aim for ~10% on the clean, simple, quick flips that I know I can get done in a 6 months and I know will sell fast.
If I'm getting into a bigger deal that will take longer and will have a smaller buyer pool in the end, I aim for 20%+.
(With that being said, on flips I actually haven't ever looked at profit as a percentage. I just underwrite each deal and then proceed if the dollar profit number lines up with the effort and risk. But I did the math on my past couple flips and they've all ended up in the 10-20% range.)