Hey all, I am a newer flipper in the Washington DC region and was wondering what a reasonable expectation for ROI should be on my projects? Please let me know if you think the ROI should change on the type of project or the amount invested. Thanks!
I'm a contractor in the Washington, DC and sounding areas. My clients have seen anywhere from 15%- 25% ROI if not more. I would say it does vary per deal. Hope this is helpful.
I am by no means an "experienced" flipper as I have only completed 2 and about to beign the 3rd. However on the first two I had drastically different ROI's. The first was just over 69% and the second was 29%. These numbers are high because I provided nearly all of the labor and they were both bought at auction and seriously under valued.
My pro-forma going forward is build on a projected 23% ROI with which I will be very satisfied. That will out perform all other investments that I have.
One suggestion is to keep really accurate records and account for things correctly. No point in trying to fool yourself by fiddling with the numbers.
@John Gregg - I would consider cash on cash returns as a metric to measure the deal and it can be anywhere from 10-20% initially. And as you know once you have been through the process, you understand the nuances, you can get better at maximizing profits. But to start with I would say anything between 10-20% is good.
Thanks Nilesh. That is a very helpful answer and I believe those figures are reasonable returns for the DC market.
I have been flipping properties now for 18 years. As I went along I was able to tighten up the process to max profits some. Your real profit comes when you buy. I now never move forward on a project that will bring me less then a $20000 return on a $80000 investment.
I would aim for at least a 20% margin. That will give you some breathing room in case things go wrong (which they often do by the way).
I should note that a 20% margin on a flip will net a much higher ROI on the cash you put in the deal, but it depends on how much you finance and how much of your own money you use. If you fully finance it, your ROI would be infinite.
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