What difference between rehab flipping and improvement?

[Alexey Krol]

Hi, there. I am researching flipping market and i can divide it on 3 segments:

1. rehab - when someone gets ugly or under condition house, puts a small money to get condition shortly and sale it as soon as possible - a small profit, high dependence on purchase price. in this case we earn on buying.

2. improvement - getting old or cheap house, puts more money to get more expensive house which we can sale for high price and get more profit. in this case we earn on buying and improvement to get highest price among around houses in that location

3. re-building or building new one - when we destroy old and build new house. in this case we earn more profit when get something absolutely new with highest price. Obviously, it takes more money and time since purchasing to sale, but i guess it may be more profitable.

My question is:

I read the main rule on rehab market is 70% rule, but i assume on improvement and re-building segment there are another rules, because we can get price above average market price.

Can someone give a couple comments about this?

[Manolo D.]

Alexey Krol On #3, you spend and get 30-50% profit of the selling price, on #1, you buy at 75-80% and hopefully profit 5% (in LA). #1 and #2 is the same.