What's the least investors want to make on a flip?

Question

So I am in the Phoenix Arizona market. I was running my numbers and since I'm new I kind of don't know... what is the least profit a fix and flipper likes to make? Is $30,000 good? I always subtract profits, my wholesaling fee (cause I'm wholesaler) and repair costs. But what is good profits? All opinions welcomed

Evan Polaski · Answer

@Alejandro Salcido you need to look at it as both.  ROI is great, but 25% ROI on $80,000 investment is $20,000.  Good ROI, but that $20,000 can get wiped out very quickly with a collapsed/cracking sewer line, and as @Luke Marsh may know, it seems every buyer in Cincinnati wants a sewer scope any more, or at least they did for a few years.

So yes, I want to know that I am making about 20% ROI, but I also need to go in thinking I am making at least $30,000 so I can feel comfortable that I won't lose money if a big ticket items comes up that wasn't planned for.  Even if everything is clean, there is still a dollar amount I need to just deal with the headaches.

Account Closed · Answer

I just finished and sold one off of Glendale and 23rd. I bought for $169,000 put $60,000 into it and sold for $325,000 without an agent. If I can't clear $50,000 in my pocket on a flip on a $275k - $300k project, then it probably isn't worth my time.

Luke Marsh · Answer

Hi @Alejandro Salcido I would personally look at it in terms of ROI instead of straight up $30,000 profit. The $30,000 could be good or bad depending on purchase price, rehab costs, etc. I would want at minimum 15-20% ROI, ideally 20%+.

River Fuller · Answer

Like others have said, it depends on the purchase price.  I like a 30% roi usually.  I was just looking at a deal, purchase price 87k, rehab 5-10k, arv 130k.  To me that deal wasn't good enough, because after closing costs both ways, realtor fee, carrying costs and my time, I was going to make 20k.  If the purchase price was 50k and I could clear 20, I would have most likely gone for it.  I did a deal recently, 55k purchase price, 10k closing costs (lol high I know) rehab 20k, sold for 134k no realtor, net of around 50k.  I considered that to be an amazing deal.

Also did one where I made 30 on a 70k purchase price, 15k rehab, sold for 130.  I felt good about that one, so to me it just depends on the how much I'm investing to make 30k.

Alejandro Salcido · Answer

@Jeffrey Daniels Thanks I have a potential deal, 130k asking price ARV 185k, about 15k in repairs. Numbers seemed kind of tight that's why I was asking how what's the least of profits a flipper would take.

Jeffrey Daniels · Answer

@Alejandro Salcido it seems we're talking about two different strategies here. If wholesaling then you're probably looking to buy and sell the home same day without ever really putting money into the deal, besides earnest - so I've seen $20k-$30k returns on homes under $200k - but that's like late night tv infomercial stuff, and it depends on finding a desperate, uneducated, or disinterested seller.

If you're looking at ROI on buying the home and making repairs, etc. That's fix n flip my friend, and I think margins are going to depend on the size of you're operations. Someone just starting out with little capital and no contacts may be lucky to net anything compared to a flipper working on several projects at once with a dedicated team. Things are tough here in Phoenix, and to start out here you've got to look where others won't.

Alejandro Salcido · Answer

@Joanne Eriaku Thank you 👍🏻now I can be more comfortable making offers

Alejandro Salcido · Answer

@J Scott Thank you! That makes more sence I really appreciate it.

Joanne Eriaku · Answer

@Alejandro Salcido, I agree with J Scott, its more of a percentage ROI than a hard figure. I'd be motivated by a deal anywhere above 20% ROI. Anyhting below that is a bit too thin for me

J Scott · Answer

Most investors would consider a $30,000 profit on a property that resells for $100,000 to be great.

Most investors would consider a $30,000 profit on a property that resells for $1,000,000 to be horrible.

Most experienced investors are going to be looking for a percentage return based on the total investment or the resale price.  Personally, I look for between 15 and 20% return on resale price, depending on which market I'm in.

What's the least investors want to make on a flip?

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