After Renovation Value and Comps?

[Jimmy Humphrey]

Hi,

I am a newbie. I had a question about renovating and flipping homes, and the after reno value.  

Reading around, I've read on some sites that home remodel projects don't often equal a return on investment. For example, you could spend 25k on a kitchen remodel, but only recover 60% of what you put into it.  How is it that then when you flip a house, you are not only able to get all your cash back, but actually come out with a profit?

Is this because you are buying a seriously distressed property which is on the lower end of the comps, and then putting in additions/features that now make the property equal to something on the higher end of the comps? Therefore, you get a return on your investment because the property was distressed, whereas my personal home is already in good condition? 

In otherwords, is the highest comp the most I can realistically expect to get on my investment for a flip?

Jimmy

[Larry Turowski]

@Jimmy Humphrey That is exactly it. If I could get 3x what I put in for renovations I could flip any house on the MLS.

It is about buying at the right price. You make your money when you buy, as they say.  If a house would sell for $100K fixed up but needs $30k of work I need to buy it at $40k or $45k to make a profit.