I am curious to know what type of ROI are you looking for on a buy and hold.? And how much profit are you looking for on a fix n flip.?
@Ross Mcghie - I will try to answer your question, but it will be from a midwest perspective. Most guys who do flips on a professional level and have a pipeline process in place will make about 15% net before taxes on average. Sometimes you have a 20%+ deal and sometimes you fall a bit short. That's a lot of flips at median price points to have a good year!
On a buy and hold you can expect a net cash profit of about $200 per door. This will typically increase as your investment matures. Total ROI on a buy and hold is much greater, because you also deleverage the loan and appreciate over time and with rehab. a combined ROI should be at a minimum of 10% on value (unleveraged) or over 30% cash on cash leveraged.
Now, before I get tomatoes thrown at me, yes you can do better than that, but I think it's better to keep the expectations a bit more conservative and if you land a home run later, that's the cherry on top.
Thanks Marcus, that really helps. I'm in South Florida price points are little different, on the flip 30k in profit and 14% on buy n hold. Those are my numbers. thanks
If you were to rent the house for 2-3 years, how much you would make in rent?
That depends on your monthly rent. But if you're ROI is 14% that will take 7 yrs to make back the money you invest. Hopes that helps. thanks
What does 14% translate to in actual dollars? You would get $30K from the flip, but 14% on renting-14% of what? 14% of $100K is $14K, vs $28K on $200K. You can't compare percentages and dollar, you need to be comparing the same thing ($ vs $).
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