Crumbling profit margins - is it still worth the risk?

Question

I'm a low volume investor and used to buy, rehab and flip or buy, rehab and rent and sometimes flip after holding a few years.

Now, I have flipped and acquired several properties from 2010 to 2018 and my margins were high.. Also, all my current 5 rentals have a 20 - 30% annual ROI (based on total money invested). I'm on many wholesellers mailing list but I have not come across any properties that would even get close to that..  I often sold my flips for more than twice what I had into them and now, you can maybe make a $30k profit on a $150k home here in Central Florida. $30k profit is not worth the risk as any unforseen issues with the property may eat up that margin easily.. I'm not dealing in high volume and margins that low don't cut it for me.. Does anyone have the same issue finding deals with better margins? It has been 3 years since I bough my last 3 properties..

Tyler Gibson · Answer

I don't deal with flips very much but yes recently we call wholesalers, Retailers. My clients have been buying in Lakeland for long-term buy and hold and have had some success buying right off the MLS. We aren't greedy we don't need a ton of cashflow. We are happy to have solid deals that are analyzed conservatively and still produce positive net chasflow.

Matthew Crivelli · Answer

Everything in this world runs in cycles, right now the sellers have the buyers by the balls. Nothing lasts forever and buyers will have there day in the sun again. Just like the stock market - longest bull run in history is most likely setting us up for some serious pain ahead. Opinion**

Olivier Mader · Answer

If interest rates stay low, it may be a long time until the next crash.. I'm not interested in buying and holding and making less than 10% annual ROI. I can make more than that in the Stock Market. Not a good investment for my money.. I could make a ton of money selling my rentals right now but I'm not crazy about getting hit with Capital gains taxes... 1031 exchange is not an option as I can't find any that meet my criteria..  My annual ROI on my rentals is extremely good, so I will just sit and wait.... keeping cash available to buy if a deal pops up..

Olivier Mader · Answer

If the volume is high enough, lower cash flow works, but for me it doesn't... Once in a while I come across properties from wholesellers that give you 10% ROI but I need more than that..