I am searching for an article reporting on the average gross profit a Real Estate Investor should expect to receive if he/she were to rehab a single family home in the metro Atlanta area. I would like to use this article as a reference. I found an article on the AJC stating that Real Estate Investors who rehabbed properties earned on average $50K gross profit in 2014 (http://www.ajc.com/weblogs/biz-beat/2014/jun/20/report-metro-atlanta-house-flippers-lag-nation-pro/). This seems rather high. I am hoping someone with great insight in the Atlanta market can lead me to the right article to reference or provide good insight on what should be expected. Thanks!
@Briana Johnson I've not seen this article. I'm not sure it exists. Results vary wildly based upon experience, timing, and strategy.
However, based upon my experience I think there's a scale of results and expectations by experienced investors. Here's what I expect. Time/complexity of the deal is as much a consideration as cash outlay.
Minor Cosmetic Flip - No layout changes, just paint, carpet, swap fixtures. Total rehab cost 20 - $30k. I expect a $20k margin and a very fast, easy project.
Moderate Cosmetic and Layout Modification Flip - Minor layout changes including addition of bath, laundry, foundation issue, mold issue, OR opening up Den/Kitchen. $30 - $60k rehab cost. I would expect $30k - $40k for this type of project.
Major Rehab -- Interior gut or moderate addition, pop top. $120k rehab expense. $80 - $100k profit.
New Build -- Either starting with dirt or leveraging existing foundation, new build. $100k+ profit unless a subdivision.
Thank you for your insight. This is very helpful. I appreciate the break down in the level of rehab that would be completed and the expected profit related to that project.
@Briana Johnson -
I primarily play in the major rehab/new construction/subdivision space. The numbers @Rick Baggenstoss mentioned were right on target.
For major rehabs, net profits can be $80k+,
new construction 100k+, and
subdivisions can be significantly more.
As speculators, we understand there are many factors that contribute to increased profit expectations and the success of a project. Therefore, I would complete the due diligence that most do incorrectly (or don't do at all), including:
1. Neighborhood & school analysis
2. Repair costs, and
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