How much profit should you make on your first flip?

Rehabbing & House Flipping
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How much profit should you make on your first flip?

Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes

I know when you first get started investing in real estate, money is always a tough situation. You never want to lose money when you're buying and flipping a house. When flipping a house you should make as much profit as you possibly can. You should be making absolutely no less than 30% profit margins from your fix and flips. If your bringing in anything less than that, it's time you rethink your investing and what you're putting into these houses.

How much profit are you making from your flips and what are guidelines to success?

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Account Closed
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y

I will give you an example of a current deal that is scheduled to close on Friday. I live in one of the lowest cost of housing areas of the country so my numbers will seem small to most. I have had this house for 6 months and it was purchased for 82k. With repair costs and holding costs I have right at 100k in it. The contract price is for 138k and I will have a little less than 8k in closing costs so I will make roughly 30k. My original target selling price was 140k so my minimum profit level was 28k. I barely made it this time. A few times I might dip below the 20% but not by much. I also rarely do better than 30%. No grand slams here but a lot of solid singles and doubles.

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  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    Sounds like you have already laid out our guideline for success. My personal goal is to pocket 20% Of ARV before taxes.

    2Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Account Closed:

    Sounds like you have already laid out our guideline for success. My personal goal is to pocket 20% Of ARV before taxes.

    Good one mate,

    Can you reveal the numbers on any particular deal?

    We are just finishing up an A Class flip that we should make 50-70% net.

    Crazy numbers but they only come along a few times per year lol

    Thanks

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  • Brian Garrett
    Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
    9y
    Originally posted by @Engelo Rumora:
    Originally posted by @Account Closed:

    Sounds like you have already laid out our guideline for success. My personal goal is to pocket 20% Of ARV before taxes.

    Good one mate,

    Can you reveal the numbers on any particular deal?

    We are just finishing up an A Class flip that we should make 50-70% net.

    Crazy numbers but they only come along a few times per year lol

    Thanks

     Those are some very impressive numbers. Kudos!

    2Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Account Closed:

    Sounds like you have already laid out our guideline for success. My personal goal is to pocket 20% Of ARV before taxes.

    Good one mate,

    Can you reveal the numbers on any particular deal?

    We are just finishing up an A Class flip that we should make 50-70% net.

    Crazy numbers but they only come along a few times per year lol

    Thanks

     Those are some very impressive numbers. Kudos!

    Thanks mate

    Those profit margins are very rare.

    We always shoot for 30%+ and tend to get it often.

    Ohio is a "boring" market when it comes to growth.

    But from a profit or cashflow perspective, it's freaking amazing.

    I know many folks from the West Coast that brag about a $50,000 profit on a $500,000 investment lol

    We can make a $50,000 profit here all day long on a $100,000 investment.

    There are many great deals and home owners still have the capacity to purchase, meaning the exit strategy is solid.

    Thanks again

    Podcast Guest on Show #89
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    2Reply
  • Brian Garrett
    Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
    9y
    Originally posted by @Engelo Rumora:
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Account Closed:

    Sounds like you have already laid out our guideline for success. My personal goal is to pocket 20% Of ARV before taxes.

    Good one mate,

    Can you reveal the numbers on any particular deal?

    We are just finishing up an A Class flip that we should make 50-70% net.

    Crazy numbers but they only come along a few times per year lol

    Thanks

     Those are some very impressive numbers. Kudos!

    Thanks mate

    Those profit margins are very rare.

    We always shoot for 30%+ and tend to get it often.

    Ohio is a "boring" market when it comes to growth.

    But from a profit or cashflow perspective, it's freaking amazing.

    I know many folks from the West Coast that brag about a $50,000 profit on a $500,000 investment lol

    We can make a $50,000 profit here all day long on a $100,000 investment.

    There are many great deals and home owners still have the capacity to purchase, meaning the exit strategy is solid.

    Thanks again

    Sounds like I need to start looking at investing in Ohio. Even $50k on a $100k investment is a serious ROI and a lot more than most are getting elsewhere in other markets. Where are you sourcing your deals from? MLS? Wholesalers? Mailers? Driving for dollars?

    1Reply
  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    I will give you an example of a current deal that is scheduled to close on Friday. I live in one of the lowest cost of housing areas of the country so my numbers will seem small to most. I have had this house for 6 months and it was purchased for 82k. With repair costs and holding costs I have right at 100k in it. The contract price is for 138k and I will have a little less than 8k in closing costs so I will make roughly 30k. My original target selling price was 140k so my minimum profit level was 28k. I barely made it this time. A few times I might dip below the 20% but not by much. I also rarely do better than 30%. No grand slams here but a lot of solid singles and doubles.

    8Reply
  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    9y

    Every market is different so to expect large returns across the US is somewhat unrealistic. In Ohio, I'm sure one can purchase a house for less than what a brand new car sells for whereas LA, SF, San Jose etc. have a median home price of over 500k. The equity just isn't as abundant when you can get a house for 30k and sell it for 150k. Apples and oranges basically.

    1Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Account Closed:

    Sounds like you have already laid out our guideline for success. My personal goal is to pocket 20% Of ARV before taxes.

    Good one mate,

    Can you reveal the numbers on any particular deal?

    We are just finishing up an A Class flip that we should make 50-70% net.

    Crazy numbers but they only come along a few times per year lol

    Thanks

     Those are some very impressive numbers. Kudos!

    Thanks mate

    Those profit margins are very rare.

    We always shoot for 30%+ and tend to get it often.

    Ohio is a "boring" market when it comes to growth.

    But from a profit or cashflow perspective, it's freaking amazing.

    I know many folks from the West Coast that brag about a $50,000 profit on a $500,000 investment lol

    We can make a $50,000 profit here all day long on a $100,000 investment.

    There are many great deals and home owners still have the capacity to purchase, meaning the exit strategy is solid.

    Thanks again

    Sounds like I need to start looking at investing in Ohio. Even $50k on a $100k investment is a serious ROI and a lot more than most are getting elsewhere in other markets. Where are you sourcing your deals from? MLS? Wholesalers? Mailers? Driving for dollars?

    The Midwest in general would offer similar numbers.

    Mailers and auction sites have been veery good to us.

    Hubzu.com in particular.

    I have 4 people in the office buying all day long so when you have that much man power, you tend to come across the "diamond deal".

    Thanks

    Podcast Guest on Show #89
    Oz Realty4.5367 Reviews
    WebsiteView Page
    0Reply
  • Brian Garrett
    Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
    9y
    Originally posted by @Engelo Rumora:
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Account Closed:

    Sounds like you have already laid out our guideline for success. My personal goal is to pocket 20% Of ARV before taxes.

    Good one mate,

    Can you reveal the numbers on any particular deal?

    We are just finishing up an A Class flip that we should make 50-70% net.

    Crazy numbers but they only come along a few times per year lol

    Thanks

     Those are some very impressive numbers. Kudos!

    Thanks mate

    Those profit margins are very rare.

    We always shoot for 30%+ and tend to get it often.

    Ohio is a "boring" market when it comes to growth.

    But from a profit or cashflow perspective, it's freaking amazing.

    I know many folks from the West Coast that brag about a $50,000 profit on a $500,000 investment lol

    We can make a $50,000 profit here all day long on a $100,000 investment.

    There are many great deals and home owners still have the capacity to purchase, meaning the exit strategy is solid.

    Thanks again

    Sounds like I need to start looking at investing in Ohio. Even $50k on a $100k investment is a serious ROI and a lot more than most are getting elsewhere in other markets. Where are you sourcing your deals from? MLS? Wholesalers? Mailers? Driving for dollars?

    The Midwest in general would offer similar numbers.

    Mailers and auction sites have been veery good to us.

    Hubzu.com in particular.

    I have 4 people in the office buying all day long so when you have that much man power, you tend to come across the "diamond deal".

    Thanks

     Auctions are always full cash deals with no interior access correct?

    1Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    9y

    I've done one flip so far and only made $10k.

    But it was just over a 50% cash on cash return.

    I'm just glad I didn't lose money!

    4Reply
  • Brian Garrett
    Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
    9y
    Originally posted by @Max T.:

    I've done one flip so far and only made $10k.

    But it was just over a 50% cash on cash return.

    I'm just glad I didn't lose money!

     Mind sharing the deal with us so we can learn from it?

    2Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    9y

    @Brian Garrett

    I posted about it earlier here:

    https://www.biggerpockets.com/forums/522/topics/419581-my-first-flip---story-analysis-and-numbers

    6Reply
  • Brian Garrett
    Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
    9y

    @Max T. Awesome thanks I'll head over there now.

    1Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y
    Originally posted by @Engelo Rumora:
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:

    I know many folks from the West Coast that brag about a $50,000 profit on a $500,000 investment lol

    I would wager that it is predominately West Coast equity that is buying those flips from you. If so, you may not want to bite the hand that feeds you, Mate. LOL.

    1Reply
  • Account Closed
    Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
    9y

    My partner in Austin & I just bought a 3 bed 3 bath for $100 down. We are taking over the mortgage of $185,000 with $8,000 to the seller for moving. (We are into it for $8,000 total Plus closing) There is no work to be done, it is a 4 year old house. We have it on the market for $239,900 30 days later with us doing the marketing. No real estate agent involved. Does that count as a flip? I don't know the ROI but I like the numbers.

    Keep on buyin'

    Ken

    4Reply
  • Bart H.
    Dallas, TX · Member since 2016 · 1k+ posts · 745 votes
    9y

    First Flip?  you hope you break even.

    You will likely buy a little too high, you will rehab it slow, you will spend twice as much money as you should have,you will be lucky if you find halfway decent contractors. And if you do, you will slow them down. Oh and at the end you will have taken too long to sell it, and the ARV will be less than you anticipated.

    When its all said and done, break even on your first one and learn the business and imo you haven't done all that bad.

    8Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:
    Originally posted by @Account Closed:

    Sounds like you have already laid out our guideline for success. My personal goal is to pocket 20% Of ARV before taxes.

    Good one mate,

    Can you reveal the numbers on any particular deal?

    We are just finishing up an A Class flip that we should make 50-70% net.

    Crazy numbers but they only come along a few times per year lol

    Thanks

     Those are some very impressive numbers. Kudos!

    Thanks mate

    Those profit margins are very rare.

    We always shoot for 30%+ and tend to get it often.

    Ohio is a "boring" market when it comes to growth.

    But from a profit or cashflow perspective, it's freaking amazing.

    I know many folks from the West Coast that brag about a $50,000 profit on a $500,000 investment lol

    We can make a $50,000 profit here all day long on a $100,000 investment.

    There are many great deals and home owners still have the capacity to purchase, meaning the exit strategy is solid.

    Thanks again

    Sounds like I need to start looking at investing in Ohio. Even $50k on a $100k investment is a serious ROI and a lot more than most are getting elsewhere in other markets. Where are you sourcing your deals from? MLS? Wholesalers? Mailers? Driving for dollars?

    The Midwest in general would offer similar numbers.

    Mailers and auction sites have been veery good to us.

    Hubzu.com in particular.

    I have 4 people in the office buying all day long so when you have that much man power, you tend to come across the "diamond deal".

    Thanks

     Auctions are always full cash deals with no interior access correct?

    Pretty much correct

    Nudge the door with your shoulder. 

    It always tends to "pop" open for me hehe

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  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Max T.:

    I've done one flip so far and only made $10k.

    But it was just over a 50% cash on cash return.

    I'm just glad I didn't lose money!

    Well done mate

    I lost hundreds of thousands when first starting

    Podcast Guest on Show #89
    Oz Realty4.5367 Reviews
    WebsiteView Page
    1Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @David Faulkner:
    Originally posted by @Engelo Rumora:
    Originally posted by @Brian Garrett:
    Originally posted by @Engelo Rumora:

    I know many folks from the West Coast that brag about a $50,000 profit on a $500,000 investment lol

    I would wager that it is predominately West Coast equity that is buying those flips from you. If so, you may not want to bite the hand that feeds you, Mate. LOL.

    It's actually not mate,

    West Coast equity is buying turnkey from me and not A Class flips where we actually make the big $$$

    I do turnkey just for fun and never make a profit.

    I mean running a business should be for fun and not to make money, right?

    Sense my sarcasm? hehe

    Thanks

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    Oz Realty4.5367 Reviews
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    0Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Account Closed:

    My partner in Austin & I just bought a 3 bed 3 bath for $100 down. We are taking over the mortgage of $185,000 with $8,000 to the seller for moving. (We are into it for $8,000 total Plus closing) There is no work to be done, it is a 4 year old house. We have it on the market for $239,900 30 days later with us doing the marketing. No real estate agent involved. Does that count as a flip? I don't know the ROI but I like the numbers.

    Keep on buyin'

    Ken

    Very nice numbers and well done.

    I'm going to look at a trailer park later today that in the preliminary calculations will give me a 120% net ROI.

    Never bought such a deal so anyone that has experience in trailer parks, please reach out.

    I might be missing something in my numbers but I wasn't born yesterday and already asked some of my mentors and the figures seem to match up lol

    There are some crazy deals out there lol

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    Oz Realty4.5367 Reviews
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    0Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Account Closed:

    I will give you an example of a current deal that is scheduled to close on Friday. I live in one of the lowest cost of housing areas of the country so my numbers will seem small to most. I have had this house for 6 months and it was purchased for 82k. With repair costs and holding costs I have right at 100k in it. The contract price is for 138k and I will have a little less than 8k in closing costs so I will make roughly 30k. My original target selling price was 140k so my minimum profit level was 28k. I barely made it this time. A few times I might dip below the 20% but not by much. I also rarely do better than 30%. No grand slams here but a lot of solid singles and doubles.

    Those are very solid numbers mate

    Not just figure out how to do 10-20 per month and I'll see you in the Bahamas for some pina coladas lol

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    Oz Realty4.5367 Reviews
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    1Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Bob Okenwa:

    Every market is different so to expect large returns across the US is somewhat unrealistic. In Ohio, I'm sure one can purchase a house for less than what a brand new car sells for whereas LA, SF, San Jose etc. have a median home price of over 500k. The equity just isn't as abundant when you can get a house for 30k and sell it for 150k. Apples and oranges basically.

    And that is why I'm in Ohio and invest here.

    I wouldn't touch any other market as the numbers just don't make sense in my opinion.

    There is also a certain profit I'm use to making and the profit margins in some other markets don't justify the risk.

    Thanks

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    Oz Realty4.5367 Reviews
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    0Reply
  • Engelo RumoraBusiness Member
    OP
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    9y
    Originally posted by @Bart H.:

    First Flip?  you hope you break even.

    You will likely buy a little too high, you will rehab it slow, you will spend twice as much money as you should have,you will be lucky if you find halfway decent contractors. And if you do, you will slow them down. Oh and at the end you will have taken too long to sell it, and the ARV will be less than you anticipated.

    When its all said and done, break even on your first one and learn the business and imo you haven't done all that bad.

    Yes and yes

    Always underestimate the profit potential and over estimate the expenses and timeline

    Great advice Bart.

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    Oz Realty4.5367 Reviews
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    2Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Most of my flipper clients target that 20-30% range.

    2Reply
  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    9y

    @Engelo Rumora

    I've looked into the Midwest market and it looks to be quite profitable. Are there any specific areas in OH that are doing better than others that you focus on or do you cover the entire state? Also, what is your typical rehab like in terms of project scope and cost? Total rehabs? mainly cosmetic? Basement redesign? etc. I've seen some great numbers in your area from my own research and other investors here. Thx.

    1Reply
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