Typical Purchase Price for a Good Flip Opportunity
I'm relatively new to flipping, but I understand that the majority of profits come from purchasing the property at the right price. I'm currently exploring SFH in the Bay Area, specifically San Jose. I think an 85% ARV seems reasonable and offers a small margin for profit, though I know some other flippers target 70-75% ARV.
With that in mind, what would you consider a typical purchase price as a percentage of ARV for a good flip opportunity in the markets you're familiar with? I'm asking this while excluding local market dynamics and lender requirements as much as possible.
Thanks!
Most Popular Reply
If you buy at 85% of ARV how do you plan to make money on a flip? After closing costs and commissions which can easily add up to 10% in my market you'd be left with 5% and that is with zero work or holding coasts.
I analyze flips in real dollars, not percentages. Mostly because every house needs a different amount of rehab. If my sale price is going to be $300k less $25k commissions/closing costs less 80k rehab less $25k holding then I will only pay $140k for the house.