Flippers- what is your ROI target to make a deal worth it?

[Rosie Giacosa]

So my wife and I have done a few flips in South Florida and have one in the pipeline. However, we are not seeing the amount of good deals so we are not at the "three at a time" pace that we want to be at. I'm thinking we may be expecting too high of a return on flips than is realistic for the Miami-Dade market. Up to know, we have had a requirement to net at least $30,000 to make our time and effort worth it. I've seen many flippers in Miami bidding properties up to a point where the net return will be closer to $10,000 for a deal. They will cut corners, avoid permits, use cheap materials, etc to try to make up some margin. However, this keeps them from getting top dollar. Question: with the potential for a market correction in the near future, especially in Miami, what net return are you requiring today to make a deal worth it for you? Thanks, Art Giacosa

[Katie Neason]

$25,000 minimum projected profit before taxes. It also has to be profitability as a rental if the market crashes (plan B). That knocks out high end rentals in our market. Total invested is typically $110,000-$150,000. I have found what drives ROI more than anything is time, so we require the project to hit our minimum profit and then we push to get it done as quick as possible so we can reallocate the money.