Interested to know your recent profit margins on flips.

[Barry Ratliff]

I'm interested to know what net profit percentages or actual dollars everyone else is getting given last 6 months of market changes if any.

As the market seems to be improving, shadow inventory is coming on the market, not as many foreclosures being filed and banks and homeowner sellers are seemingly being stingy on negotiations. I am seeing reduced profit margins percentages on rehabbing and reselling. I am in the heart of Texas market, Killeen Temple Waco, where avg purchase price for flip is 50k with 10-15k rehab and ARV is 75k. Given the cost to purchase, carrying cost and cost to sell along with rehab, we are only averaging 7-9k net profit. Appraisals have moved north but so has sell prices.

It seems that on foreclosures, the banks are pricing homes knowing the rehab and closing costs for us to not make much anymore. I'm also a real estate broker for 27 years and have access to the markets above to follow the trends.

[Bryan L.]

@Barry Ratliff - I'm in small-town rural TN, and my sweet spot is similar to yours. My most common ARV is in the 80 - 100 range, and most of my rehabs are 10-20K in repairs/closing/carrying. I would probably pass on a 7-9K profit at this point unless it was a very, very easy rehab (I had one rehab last year where my total repair/closing/carrying costs were only about 3K or so). I shoot for a 15K profit minimum. I'm also a Realtor, so I make a little commission on top of that, but of course I also have expenses in that area as well. I bought 4 houses last year and could have bought more had I had more money. Starting off this year, I'm not seeing as many good potential deals out there right now, but I do have one under contract to buy. I have it at 28. Rehab will require 20 - 30 (depending on what exactly I want to do with it). And ARV will be 75 - 100 (again, depends on what I do with it). This house was listed at 55 until recently, and I didn't want it anywhere near 55. Just a few days ago I was saying "I need to buy something, but I don't see anything out there that I want". And then came a price drop and then they accepted my somewhat low-ball offer. So here we go with my first rehab of 2014.