ROI vs ROI: Same ARV but DIFFERENT SqFt!!!
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?
#3 All Forums Contributor
- Investor
- Northern Virginia
Quote from @Pierre E.: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.
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?
@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?
#1 Rehabbing & House Flipping Contributor
- Lender
- Denver
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.
#4 Multi-Family and Apartment Investing Contributor
- Cincinnati, OH
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#4 Multi-Family and Apartment Investing Contributor
- Cincinnati, OH
@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)
