Minimum Profit to Flip?

[Jesse Harris]

Hey guys,

About to go into our 4th house flip and wondering how everyone analyzes a deal and decides on their minimum profit required to do the deal? Is this a personal preference or a % of the cash you put in? Are you going into any deal at any price with a minimum dollar amount return, or a return on the cash or amount of rehab you put in? Trying to nail down my minimum because I only have enough cash to really do 2-4 deals a year. How do you guys decide on your number?

[Matthew Crivelli]

@Jesse Harris

Your all in costs (full purchase & rehab) shouldn't exceed 70% of the ARV. This will give you wiggle room to ensure you make money. If you are using a hard money loan, you may want to drop that number to 65% of ARV to account for 6-9 months of holding costs. It's very easy to get to the end of a project only to realize the bank is the only one who made money.