Rehabbers: What is your average net profit per project nowadays?

Rehabbing & House Flipping
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Rehabbers: What is your average net profit per project nowadays?

Tara G.
Investor · Cary, NC · Member since 2008 · 78 posts · 14 votes

Ours range from 8K when we first started 5 years ago to about 30K for recent flips.Averages about 18K-20K. This is net, after all selling costs.

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Rich Weese
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
15y

JScott
% of profit. Was this 100K property you made 20K on, 20%? 50K property you made 20K on, 40%? 200K property you made 20K on, 10%? It means a lot more to posters if they're comparing apples to apples. Calif property sells for more than Atlanta metro or Indiana etc. You also stated average of 20K last couple years. Would a graph show a straight line, up trend or down trend? My areas have definitely been a down trend on profit. I'd like to know % of profit folks are seeing now. Rich

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  • Luis A.
    Real Estate Investor · Atlanta, GA · Member since 2009 · 339 posts · 126 votes
    15y

    We have seen some wild swings. From $5k for the bad flops to $30k+ for the good ones. Typical rehab is $25-35k at an average cost of about $19/sft.

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  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    Dollar amount isn't the way to compare, imo. What % did you make on your investment?
    Tara- what was your total investment to make the 18-20K?
    Luis A- Same question?

    Three years ago in S. Tx I was averaging 50-70% on my money in a total time of 90 days per deal.

    Recently in FL, MUCH lower, so I left! First flip was under 30%. My most recent one closes friday. I'll be lucky to net 13% in 60 days. (if it closes friday!)

    My experience has been that more competition, more flippers paying too much (imo) and harder to get the end user qualified if not a cash deal.

    Now in S. Utah trying a different approach . Rich

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y

    Obviously, every project is different, but we've been pretty consistently averaging $20K per project for the past several years in metro Atlanta...

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  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    JScott
    % of profit. Was this 100K property you made 20K on, 20%? 50K property you made 20K on, 40%? 200K property you made 20K on, 10%? It means a lot more to posters if they're comparing apples to apples. Calif property sells for more than Atlanta metro or Indiana etc. You also stated average of 20K last couple years. Would a graph show a straight line, up trend or down trend? My areas have definitely been a down trend on profit. I'd like to know % of profit folks are seeing now. Rich

    1Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    Rich his results are at his website.

    http://www.123flip.com/results-to-date

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  • Ed L.
    Residential Real Estate Agent · Hattiesburg, MS · Member since 2011 · 475 posts · 141 votes
    15y
    Originally posted by Rich Weese:
    Dollar amount isn't the way to compare, imo. What % did you make on your investment?
    Tara- what was your total investment to make the 18-20K?
    Luis A- Same question?

    Three years ago in S. Tx I was averaging 50-70% on my money in a total time of 90 days per deal.

    Recently in FL, MUCH lower, so I left! First flip was under 30%. My most recent one closes friday. I'll be lucky to net 13% in 60 days. (if it closes friday!)

    My experience has been that more competition, more flippers paying too much (imo) and harder to get the end user qualified if not a cash deal.

    Now in S. Utah trying a different approach . Rich

    Don't mean to stray off topic...

    When Calculating my ROI...

    A) Should I be basing it on percentage of the total purchase price and renovations

    OR

    B) Based on actual cash put into the transaction (Down Payment)

    I currently base ROI on what I actually have invested...

    Leveraging money is just another cost of doing business IMO...

    Last deal I had 18K Cash invested.

    Turned a net profit of 20K 6Months later.

    110% ROI or 220% APY..

    My goal is 20-30K on sub 100K Homes... Finding good deals in that price range is pretty darn hard given all the competition.

    Did one a few months back that only made 5K... But the house cost 25K and we turned it in 1 month. Also made $1,000 RE Commission when buying.

    Flipping is always a case by case basis... Be sure that going into a deal that there is a high theoritical margin. There will always be unexpected cost that erode net profit.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    I looked at flips but ultimately decided not to do them on houses.The red tape and amount of time needed was too much taken away from doing my commercial listings.

    Average commission check for my commercial deals is as high or higher than doing flips and I can manage many more listings and close them than I could flipping houses.Once I studied flipping houses there is a lot more into it than I thought.

    I think you can make it work if you do that segment full time.

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  • Sean H.Pro Member
    Flipper/Rehabber · Pittsburgh, PA · Member since 2010 · 224 posts · 75 votes
    15y

    Rich,

    It seems like you were making awesome returns on your money. Why did you want to leave that area if you were doing so well??

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y
    Originally posted by Rich Weese:
    JScott
    % of profit.

    As Joel pointed out (thanks Joel), all my results are on my website down to the penny, including all dates, milestones, ROI, annualized ROI, etc.

    The actual profit amounts have been tremendously consistent, though my strategy has changed a bit over the past three years. I used to do more substantial rehabs to make $20K on-average; now I do more cosmetic rehabs to make the same amount. Sale prices continue to drop in my area, but I've just adjusted my offer prices correspondingly, and have also leveraged the relationships we've built with REO agents.

    In terms of ROI, it's all over the map, due to several differences among my projects:

    - Some are financed and some are cash;

    - Some are quick turn (essentially wholesale deals) and some are held for 3-5 months (major rehabs). Some are standard rehabs that are right in-between (held 2-3 months);

    - Some are sold in the $80-100K range and some are sold in the $140-180K range.

    That said, some very general benchmarks:

    - When using all my own cash, I tend to see about 25% returns in an average of about 80-90 days;

    - When financing my deals at 65-80% LTV, I tend to see about 90% ROI in 120 days or so;

    - For wholesale deals (or very minor rehabs with a quick resale to another investor), I tend to see about 10% returns in an average of 20-30 days.

    Overall, my annualized ROI averages somewhere between 100-150%, with some being a little lower and some being significantly higher (especially when financing).

    I believe other investors in my area (and my demographic) are seeing very similar results...

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  • Jason S.
    Investor · Diamond Bar, CA · Member since 2009 · 446 posts · 233 votes
    15y

    @Ed Lee - you would want to look at both numbers. The first is your real return but the second gives you insight to the risk you are taking.

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  • Ali Shah
    Real Estate Investor · Las Vegas, NV · Member since 2008 · 127 posts · 10 votes
    15y

    @ Rich,

    Las Vegas Market has tanked as well. Many new investors that are over paying and leaving just small leverages on line for rehabbers. Its gone from typical 20-25% hair cut and leverage to 5-10% levarge and buying from the FMV which leave the questions what are these people gonna do with these house? not enough room to even do cosmetic and rehab so along do major rehab and hold for 4 to 6 months and sale....The answer remains unknown.

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  • Justin S.
    Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
    15y

    Same thing here in Phoenix. Margins of yesteryear are gone, and it is pretty slim pickings right now.

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  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    Sean- I bought a large self storage facility in SW FL that required changes and stabilization. I had rearched FL and thought I could do equally well ther. Not so.

    JScott- your annualized breaks down to 25-30% for a 90 day deal. That is approx what I think is fairly comparable in most areas. No decline in % in last 6-12 months?

    Ali Shah- That is the same thing I heard from Vegas friends.

    Justin S- You guys are substantiating what I've been hearing and seeing. Time to try a different process.

    Rich

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y
    Originally posted by Rich Weese:

    JScott- your annualized breaks down to 25-30% for a 90 day deal. That is approx what I think is fairly comparable in most areas. No decline in % in last 6-12 months?

    Yup, that's about right. And I agree...my results are right about middle-of-the-road compared to other rehabbers I speak with all over the country...

    As for the past 6-12 months, deals have been tougher to get, as there seems to be a good bit more competition out there these days (other investors); in addition, the past 3-4 months have been very tough with a lot of owner occupants scooping things up for more than I'd be willing to pay.

    Our ROI hasn't decreased in that time, but only because we're more selective in our deals and we've been doing fewer projects because of it the past few months.

    That said, we've been keeping pretty busy managing rehabs for other investors... :D

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  • Sean H.Pro Member
    Flipper/Rehabber · Pittsburgh, PA · Member since 2010 · 224 posts · 75 votes
    15y

    Rich,

    Are those returns still possible in the S. TX market? If they are, is there any particular reason you chose to return to the Utah market vs TX?

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  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    Sean- I haven't done rehabs in S. Tx recently, so have no personal knowledge. I have a subdivision I bought in that area with 64 lots and 3 homes. I've put in approx 30 homes and done well on them. I have a 2 story I just accepted an offer on over weekend and just finishing 2 more. I'll be in that area the 15th for 4 days to determine current market. Subs are extremely reasonable at present. I can build for just over 50 bucks sq ft. Lot is 12K. I can furnish more #'s if anyone is interested.
    Utah is the choice at present. It hit the rough patch later than other western areas like Las Vegas, phoenix etc.so it hasn't started to improve yet. I want to be in that area to benefit. I lived in this same area once before for 14 years, bought a lot of RE and have great contacts-as well as 3 of 6 kids and 7 of 11 grand kids. It is where I want to be when/if the country implodes. Rich

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  • Jason S.
    Investor · Diamond Bar, CA · Member since 2009 · 446 posts · 233 votes
    15y

    I am having a tough time with the annualized returns quoted above if they are based on a 90 day flip.

    I cannot touch a deal if I have to turn the money 4 times to only make 30% annualized.

    This is really the margins that others are working on? No wonder I am outbid on so many deals.

    Maybe I should look into finding an investor and expand operations (instead of all personal cash as I am now), if I was only accountable for returning 25%-30% per year, I could do that without any problem. Those are my targets per deal therefore a 4 times turn would be all gravy.

    What am I missing here?

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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    15y

    Jason, what you are missing is that the numbers quoted by Rich and J Scott are around 25% in 90 days which is 100% annulaized! (not 30% annualized. I too average between 20% and 30% returns with an average time of 90-100 days, therefore, my annulaized returns range from 80%-120%.

    That said, deals are tighter now and fewer and further between so returns are also tighter and I am much more selective right now.
    That said, if you can find any investment with 80%+ annual returns in a semi-controlled environment (which mitigates most risk) other than flipping RE, I am all ears (and I doubt anyone can)

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  • Jason S.
    Investor · Diamond Bar, CA · Member since 2009 · 446 posts · 233 votes
    15y

    I read Rich as saying it was 30% annualized based on a 90 day flip. I read it wrong. Funny thing is I read it several times, and read it wrong each time.

    The numbers you quoted are where most of us are at.

    There is nothing with a better ROI, with mitigated risk. I have a lot of things with a far greater ROI but they are difficult to scale in a meaningful way and they are not secured like RE.

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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    15y
    Originally posted by Jason S.:
    There is nothing with a better ROI, with mitigated risk. I have a lot of things with a far greater ROI but they are difficult to scale in a meaningful way and they are not secured like RE.
    I hear that!

    And don't worry about the brain spaz, we all have them. I just calculated the 2% rule of the NOI rather than the gross income for another poster a few days ago! What a bone head response that was on my part and Jon Holdman was kind enough to correct me. :idea:

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  • Sean H.Pro Member
    Flipper/Rehabber · Pittsburgh, PA · Member since 2010 · 224 posts · 75 votes
    15y

    Rich,

    I would indeed be interested in seeing some numbers.

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  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    Sean- Texas first- I picked up a subdivision in Weslaco, TX (located in Rio Grand Valley) 3 years ago when I lived there.I've been building 1700+ sq ft homes with 4 bedrooms -2 baths-2 car garage , fully fenced and landscaped for a tick over $50 sq ft. My lots were bought in bulk for 12K per lot. I then converted entire project to gated community and have priced/sold lots for $23,900 and up. My total costs are under 100K per house. These are legitimately appraising and selling for 150K.I have no carrying charges or interest on lot or const. My costs to sell are under 10K, so I net 40K on my 100K investment. Const costs are paid as work is done, so my return is 40K on approx 80K avg. This is an excellent annual return if done in 3 months (200%) 150% if done in 4 months and still 100% if done in 6 months. If home doesn't sell, I can rent for $1100+ and obtain a loan to get the 100K back to use again which will still be cash flow neutral at the least.

    Utah- There are very few homes in this new area that aren't reo's or short sales. It is a snowbird area where people come every winter and many are ready to buy a second home. They don't want to play that game. They have cash and want to buy NOW. I think that is a niche I can fill. I've noticed a price range of 200K-300K that seems to be the one in demand. Inventory has diminished greatly in last 5 months and most people don't even know it is going on. I'm very careful to buy lots with some "sex appeal". On a golf course, tremendous views etc.
    I built 44 spec homes when I lived in this area from 88-2000 and I see a lot of the same characteristics going on now. It was a very rewarding time. It is an area with over 300 days on sunshine per year, gateway to MANY National/State parks and 40 miles from Gambling or 100 miles to Vegas for fun.
    Very few are actually building spec homes. I want to fill that niche. If I failed to cover something, just reply. Rich

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  • Justin S.
    Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
    15y

    Rich

    What are your construction costs for your Utah spec homes?

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  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    Justin- I'm expecting to build a quality home for $60 sq ft, plus lot. Depending on staying within budget- I'll be at that #. Rich

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  • Justin S.
    Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
    15y

    Wow, That is pretty cheap. Lowest I was ever quoted was 75/sq.ft depending on the finish outs.

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