Profit on flipping houses

[Gavin B. Hicks]

What do you guys look to get out of a flip house? Is there a percentage of what you put into it that you want to get out of it?  How do i know if I'm making a profit worth putting the time in for?

[Caleb Brown]

Everyone is different. I see anywhere from people being 60-80% all in. If it's a cash deal or leveraged that'll effect it. Also how quick of a turn around. I'd run numbers and leave enough room if rehab doesn't go well(This will depend what was done and price point). Also be conservative on the ARV

[J Scott]

I generally look to make at least 15% of the ARV in profit.

[Scott E.]

I'm similar to J Scott. My profits range from 5%-20% of the ARV. But of course I aim to be on the higher end of that range.

The past couple of years it has been easy to sell flips. But on the deals where I didn't hit my profit target, it was due to going over budget.

[Anthony Salazar]

@Scott E. Are you still actively doing flips with the economy shifting and if so, how does that effect how you run your #'s? 

[Scott E.]

Quote from @Anthony Salazar:

@Scott E. Are you still actively doing flips with the economy shifting and if so, how does that effect how you run your #'s? 

Yes, I have 3 flips going right now. I just bought another one this past Monday actually. I'm running my #'s the same as always. Even during the run up the past couple of years, I was always conservative with my ARV. I'm conservative enough to where if prices fall, I'll be ok. If they stay flat I'll hit my target. And if appreciation happens, that's just a bonus.

So to answer your question, the shift in the economy isn't changing my strategy much. But that's only because I follow a particular strategy that I believe will help me to weather any storm.

1. Be very conservative with ARV

2. Only buy in A++ locations. No exceptions. The sub market, the neighborhood, the location within that neighborhood, the lot size, the sun exposure, everything needs to be perfect.

3. Outfit all houses with design details, amenities, and "WOW" factors that none of the comparables have

4. Have a backup plan in the event we have another 2008 caliber crash (airbnb, long term rental, move into the house myself, etc)

The biggest downside to me being so particular means that I'm only doing 2-3 flips at any given time. I'm not like a lot of the other volume house flippers around here who are doing a dozen deals at once and slapping a bunch of cookie cutter builder-grade Home Depot finishes in their projects. Those guys/gals made a killing the past couple of years, but they are also the folks who will get burned if the market makes a quick turn south.

[Christian Ehlers]

Depends on your market and how much you value your own time. In more expensive markets I've seen that the percentage of profit is often a little bit lower but the overall profit is higher just due to higher home values, being able to raise ARV more with a solid rehab etc. Also if it's one of your first few flips you definitely want to run the numbers conservatively and budget in a good profit, but at the end of the day I would call it a success if you make any money at all, as you will have gained so much experience and confidence that you should come back even better for the next ones and start to really make some good money if you do it right!

Once you are a more experienced investor/house flipper then you would tend to look for bigger profits on each deal as you may have more opportunities coming in than you could reasonably handle. 

Good luck with everything!