Best Metrics for Setting House Flipping Goals?

[David Kendall Jr]

As I dive into my house-flipping journey, I've come across a variety of metrics used to set investment goals. Some, like James Dainard, emphasize an annualized cash-on-cash (COC) return of 60%-80%. Others focus on achieving a profit of at least 10%-15% of the ARV (After Repair Value). Less commonly, I've seen investors prioritize the 70% rule when evaluating deals.

With so many different benchmarks out there, I’m curious—what metrics do you personally prioritize when analyzing deals? How do you balance these different goals, and how do they impact one another? Most importantly, how can I set realistic, effective metrics to guide my investment decisions?

Looking forward to hearing your thoughts!

[Evan Polaski]

@David Kendall Jr, for deals that I am managing myself, I want a minimum $50k profit potential, and shoot for about a 15-20% profit margin, whichever is greater.

At the end of the day, percentages alone don't work for me, because my time has a value to it. Granted this primarily filters out the small deals or the highly leveraged deals, neither of which I do, but making 20% on a ARV 150k house is $30k. That house likely would take just as much time and effort as a $500k house, where i could make $100k at the same margin. Or even $75k at a 15% margin. For my work and time, I would rather have $75k than $30k.

As noted, it really comes down more to your underlying goals.  If the goal is to become a full-time flipper/contractor, then doing tighter jobs can help build momentum for a business, that will pay dividends well beyond just the specific house, itself.  

But of the options you note, the only one that really makes sense to me is the CoC option. The other two don't take into account the time your money is tied up. 15% of ARV is great, if your flips take 3 months. But not so great if your flips tie up your money for 18 months.