I'd like more specificity about the ROI on an average flip. Can you help?

[Jimmy Wellman]

I've looked online for some information about the average % of the final home price vs. the price you purchase the home for and found that the home should be purchased for 70% of your home's final sale price. However, when I googled for the gross ROI, it said it was 27.5% in 2023 and I'm very curious about the net ROI. If the purchase price is 70% of the home's final sale price, what portion of the additional 30% is the $ spent on the flip and what portion is the average net gain?

I've heard 10%-20% is the average net gain but I just want to be more clear about it.  Is that the percentage gained on the portion spent on flipping or the percentage of the price you bought the home for + the amount it costs to flip?

Can someone help me with an example where I buy a home for $70,000 then flip it until it's $100,000?  

How much time on average will I personally spend on this 4-6 month process if I hire a team?

Thanks so much for your help!

-Jimmy

[JD Martin]

Quote from @Jimmy Wellman:

I've looked online for some information about the average % of the final home price vs. the price you purchase the home for and found that the home should be purchased for 70% of your home's final sale price. However, when I googled for the gross ROI, it said it was 27.5% in 2023 and I'm very curious about the net ROI. If the purchase price is 70% of the home's final sale price, what portion of the additional 30% is the $ spent on the flip and what portion is the average net gain?

I've heard 10%-20% is the average net gain but I just want to be more clear about it.  Is that the percentage gained on the portion spent on flipping or the percentage of the price you bought the home for + the amount it costs to flip?

Can someone help me with an example where I buy a home for $70,000 then flip it until it's $100,000?  

How much time on average will I personally spend on this 4-6 month process if I hire a team?

Thanks so much for your help!

-Jimmy

 There is no average because there are few flips that are alike and what might take one guy or team 3 months might take you 3 years. It also depends on market conditions and availability of cash in the market, both of which will create more or less "meat" so to speak in the deal. When funding is plentiful and flips are rare, the competition will be heavy and experienced flippers with teams will take smaller returns just to keep their guys working, which means inexperienced 1-man crews will be shut out of the market. When funding is rare and flips are plentiful, there will be enough opportunities for everyone but return will be depressed and better operators will make better returns. 

What kind of return you can accept depends wholly on you. Personally, I wouldn't do any flip for less than $30k net of sale because STCG tax for me would end up leaving me with about $20k or so of actual profit. Anything less than that is way too much work for what you're getting back, because flipping isn't investing it's a job. But if you don't have any kind of regular income, you might be happy making $20k or even less. 

In general, you're going to make more money on solid middle class flips but you're going to need access to more capital to get it done. Most areas you're not going to turn a $100k purchase into $250k sales price unless it needs $100k in rehab. The market is just too tight for that any more.