ROI vs ROI: Same ARV but DIFFERENT SqFt!!!

Washington, DC · Member since 2016 · 129 posts · 42 votes

Within one MSA, would doing a flip on a property that has less square footage same final ARV be better than doing a flip on a larger home with similar ARV? For example an inner city rowhome vs 30 min away a detached small mansion with the same general ARV. Am I thinking about this the wrong way? Smaller house less supplies? Or do contractors tend to up their costs regardless?

If someone did a live in flip for example, how might one type of property be better than another?

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Bill J FayPro Member

Lender · San Diego · Member since 2023 · 216 posts · 209 votes

Assuming the two have the same ARVs, can you buy them both for the same price on the initial purchase? Is the higher sq ft home a cosmetic flip while the rowhouse is a take down to the studs reno? If apples to apples, the smaller home should be less risk, but I don't think it is as black/white.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
Quote from @Pierre E.:

Within one MSA, would doing a flip on a property that has less square footage same final ARV be better than doing a flip on a larger home with similar ARV? For example an inner city rowhome vs 30 min away a detached small mansion with the same general ARV. Am I thinking about this the wrong way? Smaller house less supplies? Or do contractors tend to up their costs regardless?
If someone did a live in flip for example, how might one type of property be better than another?
It depends. you can replace flooring in a 2,000sf home for a lot less than replacing a kitchen in a 1,000sf home... depends on the scope of work.
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Pierre E.Pro Member
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Washington, DC · Member since 2016 · 129 posts · 42 votes
3y
@Chris Seveney
What if its apples to apples rennovation in terms of the what… just different volume I guess?
Maybe im asking a dumb question but… just wondering
Ie it seems like if i know some guys we could do an urban town house for closure cheaper than a big suburban one less material less labor time but potentially similar or greater ARV and this greater ROI. Am i thinking about it the wrong way?
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Bill J FayPro Member
Lender · San Diego · Member since 2023 · 216 posts · 209 votes
3y
Assuming the two have the same ARVs, can you buy them both for the same price on the initial purchase? Is the higher sq ft home a cosmetic flip while the rowhouse is a take down to the studs reno? If apples to apples, the smaller home should be less risk, but I don't think it is as black/white.
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Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
3y
@Pierre E., generally, contractors might charge marginally more for a small job versus large, due to fixed costs on the company side, but ALL else being equal, you will have a lower overall cost and faster timeline on the smaller house.
But as noted, this is a grossly oversimplified scenario. When I say ALL else being equal, that means:
Purchase Price
Scope of work
Finish selection
Demand drivers of each neighborhood
Contractor availability (busy contractors often quote more)
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