Miami, FL · Member since 2014 · 35 posts · 11 votes
So my wife and I have done a few flips in South Florida and have one in the pipeline. However, we are not seeing the amount of good deals so we are not at the "three at a time" pace that we want to be at.
I'm thinking we may be expecting too high of a return on flips than is realistic for the Miami-Dade market. Up to know, we have had a requirement to net at least $30,000 to make our time and effort worth it.
I've seen many flippers in Miami bidding properties up to a point where the net return will be closer to $10,000 for a deal. They will cut corners, avoid permits, use cheap materials, etc to try to make up some margin. However, this keeps them from getting top dollar.
Question: with the potential for a market correction in the near future, especially in Miami, what net return are you requiring today to make a deal worth it for you?
Thanks,
Art Giacosa
Flipper/Rehabber · Bryan, TX · Member since 2014 · 258 posts · 170 votes
9y
$25,000 minimum projected profit before taxes. It also has to be profitability as a rental if the market crashes (plan B). That knocks out high end rentals in our market. Total invested is typically $110,000-$150,000. I have found what drives ROI more than anything is time, so we require the project to hit our minimum profit and then we push to get it done as quick as possible so we can reallocate the money.
Real Estate Investor · Miami, FL · Member since 2010 · 939 posts · 739 votes
9y
@Rosie Giacosa My desired profit is $20,000 or 20% of ARV...whichever is greater. With that said, I may need to tweak my desired profit slightly downward, I my MAO Calculation, but not below $20,000 to make my offer more reasonable.
Wholesaler · Easley, SC · Member since 2010 · 340 posts · 249 votes
9y
15% with a Minimum of $15000 for lower end homes. That is for a basic rehab and as @Nick C. said it goes up from there based on the rehab. I generally do much better than this on our direct mail purchases but MLS is to competitive to make much more.
We use 100% contractors so this is just profit from our investment and project management. If you are doing any of the labor then you need to pay yourself out of the flip like you would a contractor. That will make it easier to transition to using contractors later.
Flipper/Rehabber · Bryan, TX · Member since 2014 · 258 posts · 170 votes
9y
$25,000 minimum projected profit before taxes. It also has to be profitability as a rental if the market crashes (plan B). That knocks out high end rentals in our market. Total invested is typically $110,000-$150,000. I have found what drives ROI more than anything is time, so we require the project to hit our minimum profit and then we push to get it done as quick as possible so we can reallocate the money.
Investor · Orlando, FL · Member since 2016 · 1k+ posts · 780 votes
9y
The amount of profits that you feel is a minimum is based on your current financial situation. Sometimes a lower % of ARV might be OK if it generates a minimum of a certain amount of Dollars. Each investor is different.
Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes
9y
Hi Rosie Giacosa
That is a great question and I would say it depends on your comfort level. I will only go after a deal with 15k or more by conservative measures
because I would rather do fewer deals with higher margin than more details with high stress low
margins. While one could argue that 5k for amount of worth is worth it I would argue that you are a market correction or significant unexpected repair away from losing money. Lastly I shoot for 15k for every but I normally am all in for 110-150 so if your are investing alot more I would shoot alot higher. I find I do 3-4 deals a year making more than people doing 8-12 so why do so much more when I can be picky.
Stillwater, MN · Member since 2014 · 44 posts · 8 votes
9y
I like to see at least $25k in profit to make it worth my while. If the property is more expensive, or the rehab more involved, I'd like to see more.
I've also noticed other guys paying too much for investments. Some newbies, some guys who cut corners, or others who just want to rent them out and aren't as picky about ROI as I am. It does get frustrating getting outbid, but I'd rather be frustrated not having a deal than get into a bad one.
Developer · Hobart, IN · Member since 2014 · 773 posts · 225 votes
9y
@Rosie Giacosa our target is 30% we work with investors on most of our deals so we try to squeeze as much as possible out of our deals. Also depends on the deal if it's a quick one then we would settle for less of an ROI.
Miami, FL · Member since 2014 · 35 posts · 11 votes
9y
Thanks for your replies. I agree it really depends on your personal situation, expectations and vision.
For us, we know it will take us 3-4 months to reno a property in the condition that we buy. It's a lot of time, effort and expense. This is why 30K profit is the minimum we will do today.
I guess if deals were plentiful and property values where much less, I can understand targeting less profit because you make it up on volume. Three 15k deals at the same time will trump my 30k one all else being equal.
Unfortunately, Miami is not that type of market unless you are going into the D neighborhoods. Any sort of market hiccup and your deal will turn upside down. It's not our strategy.
Allow me to take this in another direction. How are you guys finding deals today in Miami-Dade county? MLS, wholesalers, foreclosure auctions, driving for dollars, direct mail, etc?
I'll start. We are relying on MLS sleeper deals, wholesalers and auctions.
Investor · Miami, FL · Member since 2016 · 11 posts · 4 votes
9y
@Rosie Giacosa We seek 30% Return on our Cash on Cash. On deals we find thru the MLS it ends up being aorund 18-25k. On deals found thru auctions or mailings, the returns have been greater from 35k up to 70 l on a property purchased through county auction. We have found our deals thru mailings, mls cash lists, county auctions, and mailing lists. We also have a great relationship with our realtor and lender. Feel free to reach out to me.