What's the absolute minimum ROI you would take when purchasing a home to renovate? What's the typical ROI on a property that you expect to see offered by a wholesaler? Any response is greatly appreciated!
Generally, I want to be all-in at no more than 70% of ARV. I might go to 80% if the rehab is real light and the house will retail easily.
I shoot for a minimum ROI of 15% that is:
Profit/(purchase costs + holding costs + rehab costs) > 15%.
In my market ARV is $275K and up.
I use a time element in my calculations and try to get 100% AROI (annualized return). I also use leverage on my deals.
Thank you all! Your comments are extremely helpful
I try to stay around 70% of ARV, or 30% ROI on paper. OUr typical rehab project is about a 6 month from purchase to sale.
I dont like light rehabs as they can be hard to justify increase in value to appraisers. My ROI might be higher then someone who does 'carpet and paint' renovations because it takes us more time, costs more money, and is much more complicated then cosmetic remodels.
15% of ARV with a minimum $15K profit.
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