Flipping houses ROI or renting need to understand the numbers

3 Replies

Hello,

Will you help me crunch some numbers? Say i buy a property for 40.000$ a duplex. 4 rooms in total rent it out for 500$ a month. But the property will need a 10.000$ investment in second hand furniture paint job to be ready for sell or rent. let`s say i`m flipping for 60-70.000$ how much am i gettting for ROI Wise about 20%.And can i make that sale in 2 months because other properties are selling for the same price and my property has a new paint job?How many buy and flip deals could i do per year? 5-6 and keep reinvesting my money at lets say having 20% roi for each property flipped. Will i have than made how much 100% roi or a 200% roi if we take into account compounding?

I need the excel sheet formula this

@Bogdan Masca I am trying to follow your numbers here. So a duplex has two units and you can rent each unit for $500/month which would give you $1.000 in gross monthly income. You are all-in on the property for $50.000. What are your monthly expenses? Is there an HOA? Make sure you are using good % for your capital expenses, monthly maintenance, vacancy estimate, and property management fee on top of your taxes and insurance. It should do well as a rental but I am unsure of where you are buying this and location will make a big difference as far as tax and insurance.

As a flip you would not be making much money. You spend $50.000 to buy and fix up a duplex. It takes 2 months in work and 2 month to sell (which is a very aggressive timeline) which costs you roughly $500/month depending on insurance and taxes and assuming no financing costs. If you are talking about a US property, your sale costs will be roughly 6% for commissions and another 1.5% for closing costs. This is excluding some other important costs but you can get all of that from BP calculators or from any flipping book which you will want to read at least one or two to have an idea of the process.

$40.000 - Purchase price

$1.400 - Purchase closing costs

$10.000 - Repair costs

$2.000 - Holding costs

$3.900 - Commissions

$975 - Sale closing costs

$58.275 - Total Costs

$65.000 - Sale Price (I split the difference in your range)

$6.725 - Profit before personal taxes 

$53.400 - Total cash invested (Total costs - commissions - sale closing costs)

12.59% - ROI (again assuming no financing)

The ROI is not horrible but one thing goes wrong or if you are off on your sales number by just 5% and you lose ALL your profit and take a loss on this as a flip.

The property you are mentioning should be a rental based on the limited numbers you provided. If you want help analyzing deals like this, sign up for the Pro account and use the provided calculators or just pick up a flipping specific book and a renting specific book. Just about every book on the market will have something for you to use.

Good luck and persevere!

If you have any further questions, PM me or add them to this thread and I would be happy to help.

If i am buying a property for 80k  and reseling it for 130k what are the numbers.

And what are the number i buy the same property with a down payment of 20k fixing it with 10k and selling if for 130k can you do 5-6 deals like these in a year? 

Case 1 purchase price 80k

purchase closing costs 2k

repair costs 10k

holding costs 1.6k

commission 8k

sale closing cost 1k

101.600$

Sale price 130.000$

Profit  28.400$

is that a 27% ROI

Case 2 with financing

Purchase price 25k

Purchase closing costs 2k

reparis 10k

holding 2k

commision 3900$

Salese closing costs 1k

I`m probably gonna need to set some money a aside for 2 montly payments i`m guessing 2.4k

Sales price 130.000$

costs 46.400$

Profit 83.600$

ROI 64%

DId i get it right

I probably asked this before can i do 5-6 deals like this per year?

Also how many times is the max you can refinance 4-5 time i which case i`m happy with 2-3 times

Thank you

Im seeing much higher purchase costs.  4k at least on a 100k purchase. Between closing fees, title searches etc. and thats a cash purchas. If financed you can tack on points, origination, appraisal, survey, lender title insurance. 

I was recentl quoted a total of 10k in costs on an 80k loan