Profit

[Landon Dolezal]

How do you determine what you think is an appropriate amount to subtract for profit on deal?

[Nathan Emmert]

Originally posted by @J Scott:

I like to target 20% of the ARV (my expected resale price) as profit.

For example, if I expect to resell a property for $200K, I'll target a $40K profit. 

That said, if there isn't any major risk or effort involved, I'll reduce my requirements and accept a 15% expected return.

 What contingency budget do you establish on top of your expected budget or do you hold risk entirely in your profit markup?  If you are anticipating $40k in repairs (for example), do you budget $44k and then expect to make 20% profit... or do you budget $40k and understand any growth will lower the profit margin?