I'm just curious to know, what does everyone write in as their profit on a flip when doing their calculations?
I'm currently flipping a house in East Stroudsburg, Pa and on that we should be at about 22k profit when all is said and done. The house cost 25k with 30k in renovations and hoping for a sale between 90k - 100k.
I live in the Bronx, New York area and am looking to find a deal and doing a property flip here. Should I use a number like 50k or go with a 20% profit to do my numbers? Average single family flips are selling between 450k and 500k. I'm curious to know what other investors are doing.
Hey @Ceasar Rosas - if you are going to be flipping houses in different markets at different price points you might want to use a % for your return. This will enable you to know what you'll make (% wise) so you will be more consistent. The actual dollar amount for profit will vary because the home prices are different but it won't matter because you'll be using a consistent formula. IF you use a $$ amount you could get yourself into trouble if you go up-market.
Making ~20k on a 100k house (20%) is much different than making ~20k on a 500k house (only 4%!!).
If you're going to stay in a consistent market with similar priced homes, then consider using a minimum number you'd like to make in profit (like 20k+ in your example). Still good to understand the % ROI as well but you can be more confident in just a number if you stay in a similarly priced market most of the time.
But if you fluctuate markets definitely use a minimum % return you want to have each time. I'd shoot for at least north of 12% and hopefully closer to 15-20%.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.