How Profit to Expect in Each Price Range.

Question

How much profit do you consider when underwriting fix and flips by price range?

I am in Memphis Tn. Memphis has very dynamic market. Meaning, there is a sub 100k market, sub 250k market, 250-400k market, 400-600k market, 700-1m and $1m+ market. While each market operates very differently. as well they come with different expectations.

A standard 15% - 20% profit margin doesn't work across these markets. A standard 50k in profit doesn't work across all markets.

Speaking in terms of Profit after:

Financing Origination

Carrying Cost

Closing Cost

Holding time 6, 12, or 18 months.

How do you approach determining your projected profits.

Arman Ahmed · Answer

I agree that one profit target doesn't work across every price range. I usually look at the actual dollars left after all costs, holding time, and a cushion for unexpected repairs rather than relying on a fixed percentage. The higher the risk and the longer the hold, the more profit I'd want to justify the deal. I've also seen investors explore the Midwest for flips where lower acquisition costs can create some good opportunities, especially off-market deals.

Ryan Cobb · Answer

Jamie, great question, and you're right that one number doesn't fit every band. What we see work best is setting a minimum dollar profit for the low end and a percentage for the higher end, then stress testing both against time. Under 100K, a percentage target can look fine on paper and still leave you with too few dollars to absorb one surprise, so a dollar floor matters more there. Above 400K, carrying cost becomes the big swing, because every extra month of interest and taxes on a larger loan eats margin fast. We'd run every deal at your planned hold and again at six months longer, and only take the ones that still clear your floor on the longer timeline. How are you seeing days on market differ across those bands right now?

Lindsay and Ryan with Futures Funding

How Profit to Expect in Each Price Range.

2 Replies