Updated over 7 years ago on . Most recent reply
What's a good deal to you?
Hi BP,
I currently live in the Nashville area, and would like to have an idea of what's a good flip deal to you? Such as, what is a good cap rate, ROI, etc., to you? Now this specifically isn't a question just for Nashville investors. I would like everyone's input on what's a good deal to them, & why? BUT, would also like to know what Nashville investors are looking for in a flip as far as a good deal.
I've been looking for homes on the MLS & would like to have an idea of what more I should expect?
Thanks in advanced.
Most Popular Reply
Christian,
A lot of factors go into that, what some investors are happy to get others may turn down and try to get more, some have different strategies on how they can achieve what they want. That said, for flips, you want to buy low enough so that the renovation costs plus holding costs will still be low enough that when you sell at the ARV of the property you will make a profit. as long as you know the market and know what the house could sell for and make money, i think that is any investors goal. the key is working backwards, start with the ARV subtract reno costs, for the time you plan it will be held, subtract taxes, insurance, electric, gas, water/ sewer, you will also want to subtract closing costs when you purchase and when you sell and you also want to subtract what profit YOU would like to achieve, that would be your purchase price. what you should shoot for is any return on investment that will outperform the average stock return or deposit return, if you can not then you might as well invest in the stock market or deposit the money in a bank. there is no magic number that everyone agrees on. I am a buy and hold investor, i have done 2 flips, one i did because i knew i could get a good return ( 3 months - 50K profit) the other i did because i liked the house and didn't want to see it decay ( total rehab and small addition) made $1200 after all costs. i was ok with that because i saved a house from ruin, and i got my money back i put into it.