How much profit should you make on your first flip?
Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votesHow much profit should you make on your first flip?
Most Popular Reply
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9yI will give you an example of a current deal that is scheduled to close on Friday. I live in one of the lowest cost of housing areas of the country so my numbers will seem small to most. I have had this house for 6 months and it was purchased for 82k. With repair costs and holding costs I have right at 100k in it. The contract price is for 138k and I will have a little less than 8k in closing costs so I will make roughly 30k. My original target selling price was 140k so my minimum profit level was 28k. I barely made it this time. A few times I might dip below the 20% but not by much. I also rarely do better than 30%. No grand slams here but a lot of solid singles and doubles.
67 Replies
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @James MacKinnon:
Who are buying your properties in Ohio or are you renting them out?
Out of state and country investors
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @Yinan Q.:
50k profit on a 100k investment is insane. A typical rehab takes 4 to 6 months from key to key (from when you close to when you get paid). That's 100% to 150% annual ROI. Is there another industry that offers a better return than this?
If I could net 50k on a 100k investment, and can repeat it on a regular basis, not just one home run deal, I'd keep my head low and won't tell anyone else about my market, lol. So @Engelo Rumora , thank you for sharing with us. Is anyone else packing up and gold rush to the midwest?
No worries mate,
By all means.
Move to Toledo and do the same thing lol
I'm alone here and a feel like a kid in a candy store hehe
We do have a decent sized operation now so things are different for us but let's say I wanted to retire tomorrow.
I could sit on my A$$ all day, send out the odd yellow letter, make the odd call, buy the odd property and make $30,000 - $50,000 a deal easy.
Rinse and repeat 3-4 times a year.
Peace of cake.
Now, it took me 5+ years of 100+ hr weeks to get that stage.
All good things take time.
Get your shovel mate and see you soon hehe
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @Rodney Tyra:
Averaging 20 percent is always good and then hit a homerun now and then
Constant flow of 20% is very good
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @Joe Splitrock:
@Engelo Rumora I am curious you reference 30%, but isn't the percentage partially dependent on the property? If you were flipping a house that sells for $100K, then 30% is $30K, but a million dollar property would be $300K. I would expect higher percentage return on lower priced houses.
Also you mentioned finding a diamond and getting really high return on some deals. Do you also find with larger volume that you have some bad ones that make really low returns. I am just curious if in the end it just balances out to an average of 30% for you or is your average actually higher than that?
Thanks Joe,
Its a different story for me as I have a full blown turnkey company with millions of dollars in over heads.
I'll tell you this tho.
I'm shooting for 100+ deals this year and a 30% profit margin.
Wait till we make the Inc 5000 and then do the math.
Lot's of Hard Yakka but nothing comes easy.
I want to make as much as money as I can but still offer a top notch product and service to my investors
Thanks again
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes9y
Originally posted by @Engelo Rumora:
Originally posted by @Yinan Q.:
50k profit on a 100k investment is insane. A typical rehab takes 4 to 6 months from key to key (from when you close to when you get paid). That's 100% to 150% annual ROI. Is there another industry that offers a better return than this?
If I could net 50k on a 100k investment, and can repeat it on a regular basis, not just one home run deal, I'd keep my head low and won't tell anyone else about my market, lol. So @Engelo Rumora , thank you for sharing with us. Is anyone else packing up and gold rush to the midwest?
No worries mate,
By all means.
Move to Toledo and do the same thing lol
I'm alone here and a feel like a kid in a candy store hehe
We do have a decent sized operation now so things are different for us but let's say I wanted to retire tomorrow.
I could sit on my A$$ all day, send out the odd yellow letter, make the odd call, buy the odd property and make $30,000 - $50,000 a deal easy.
Rinse and repeat 3-4 times a year.
Peace of cake.
Now, it took me 5+ years of 100+ hr weeks to get that stage.
All good things take time.
Get your shovel mate and see you soon hehe
Only downside is you have to move to Toledo, Ohio. Well, that and the 5+ years of 100+ hr weeks. When are we going to see a new company called "Carribean Cashflow" pop up mate? Not sure if the same business model would work there, though :)
- Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes9y
Originally posted by @Engelo Rumora:
Originally posted by @Bob Okenwa:
Thanks for the insight. Much appreciated. How much do you spend on an average deal out there in terms of rehab?
Sometimes $5,000 and other times $25,000+
Don't forget that we mostly do B class and turnkey.
Our profit margins are amazing and we still deliver a turnkey product at market or below market value.
A true win/win for all.
I'll tell you this tho.
I can rehab a house for pretty cheap in Ohio.
Many folks here want work and with a company like ours, they are willing to accept lower rates for the consistency we can offer.
Thanks
The issue with you selling a product is you are just a company lookibg to sell to out of state landlords. The other issue is you are not flupping. You are, again, selling rentals to a landlord. You can delay capital improvements which would be discovered by a good home inspector.
You make $ churning homes to people chasing a return. Conflict of interest,which is why you are promoting your product on this chain.
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes9y
Threads like this are the worst for the newbie investor's reading them. They see 100% returns and based on your comments, believe they should be and can obtain the very same. The truth is, 99.9% of them will not because they do not have the experience, the expertise, the track record, the systems, the teams, and the list goes on and on.
If you are actually getting 100% returns selling flips as turnkey rental units to out of state investors, I would venture to guess many of them are overpaying for them and will likely be upside down in the very next downturn. I'm all for capitalism and making money but I'm not sure I could sleep at night knowing there was a high probability that my buyers will not come out ahead in the future. On top of that, this business model will not be as profitable or even alive at the next larger size downturn.
Point is, for all newbie investors reading this, finding a pocket location in the US that you can make these returns consistently is a pipe dream at best and stating that investor's should expect these returns or do something else is a very bold (and improper) statement. The one thing I do agree with is that I don't get out of bed either for a flip profit under $20k, but that comes with the exception of the new investor doing their first 1-3 deals where any profit is a bonus on their real life RE investment education.
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @David Faulkner:
Originally posted by @Engelo Rumora:
Originally posted by @Yinan Q.:
50k profit on a 100k investment is insane. A typical rehab takes 4 to 6 months from key to key (from when you close to when you get paid). That's 100% to 150% annual ROI. Is there another industry that offers a better return than this?
If I could net 50k on a 100k investment, and can repeat it on a regular basis, not just one home run deal, I'd keep my head low and won't tell anyone else about my market, lol. So @Engelo Rumora , thank you for sharing with us. Is anyone else packing up and gold rush to the midwest?
No worries mate,
By all means.
Move to Toledo and do the same thing lol
I'm alone here and a feel like a kid in a candy store hehe
We do have a decent sized operation now so things are different for us but let's say I wanted to retire tomorrow.
I could sit on my A$$ all day, send out the odd yellow letter, make the odd call, buy the odd property and make $30,000 - $50,000 a deal easy.
Rinse and repeat 3-4 times a year.
Peace of cake.
Now, it took me 5+ years of 100+ hr weeks to get that stage.
All good things take time.
Get your shovel mate and see you soon hehe
Only downside is you have to move to Toledo, Ohio. Well, that and the 5+ years of 100+ hr weeks. When are we going to see a new company called "Carribean Cashflow" pop up mate? Not sure if the same business model would work there, though :)
Nothing comes east mate and NOTHING beats hard work hehe
Bahamas Cashflow is already chipping away.
I'm just investing their myself first before I start working with investors lol
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @Jared Watson:
40%
Nice
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @Will Barnard:
Threads like this are the worst for the newbie investor's reading them. They see 100% returns and based on your comments, believe they should be and can obtain the very same. The truth is, 99.9% of them will not because they do not have the experience, the expertise, the track record, the systems, the teams, and the list goes on and on.
If you are actually getting 100% returns selling flips as turnkey rental units to out of state investors, I would venture to guess many of them are overpaying for them and will likely be upside down in the very next downturn. I'm all for capitalism and making money but I'm not sure I could sleep at night knowing there was a high probability that my buyers will not come out ahead in the future. On top of that, this business model will not be as profitable or even alive at the next larger size downturn.
Point is, for all newbie investors reading this, finding a pocket location in the US that you can make these returns consistently is a pipe dream at best and stating that investor's should expect these returns or do something else is a very bold (and improper) statement. The one thing I do agree with is that I don't get out of bed either for a flip profit under $20k, but that comes with the exception of the new investor doing their first 1-3 deals where any profit is a bonus on their real life RE investment education.
Thanks Will,
I don't agree with your comment at all.
I have never blown wind about "how easy" flipping or investing is and always stress that hard work is very important.
As for selling turnkey and sleeping.
You have "ventured to guess" wrong.
I have one of the best turnkey companies in the country, that offers one of the best products, services and cap rates.
Our reputation also speaks for itself and we have not wronged any investors to date and don't intend on ever doing so.
It doesn't matter if this business model is alive or not, as long as the investors continue getting great returns for many many years which with great property management in place, I'm sure they will.
As the moderator on this forum, your comment is disappointing and uncalled for
Much success
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @Scott W.:
Originally posted by @Engelo Rumora:
Originally posted by @Bob Okenwa:
Thanks for the insight. Much appreciated. How much do you spend on an average deal out there in terms of rehab?
Sometimes $5,000 and other times $25,000+
Don't forget that we mostly do B class and turnkey.
Our profit margins are amazing and we still deliver a turnkey product at market or below market value.
A true win/win for all.
I'll tell you this tho.
I can rehab a house for pretty cheap in Ohio.
Many folks here want work and with a company like ours, they are willing to accept lower rates for the consistency we can offer.
Thanks
The issue with you selling a product is you are just a company lookibg to sell to out of state landlords. The other issue is you are not flupping. You are, again, selling rentals to a landlord. You can delay capital improvements which would be discovered by a good home inspector.
You make $ churning homes to people chasing a return. Conflict of interest,which is why you are promoting your product on this chain.
We also flip A class properties and make bigger profits doing that, then selling B class to investors.
What is wrong with selling a greta product to out of states landlords that want a good return on investment?
Home inspectors are paid to find faults and even if you develop from ground up, they will still find stuff to red mark.
I have no need of promoting my product on "this chain" and turn down 90% of all business.
Maybe you should consider starting a turnkey company and selling to out of state and country investors.
It only takes 5+ years to do right :)
- Northern, CA · Member since 2014 · 674 posts · 444 votes9y
could have sold my first two "flips" but kept them as rentals. Could have sold first for ~100k profit (160k purchase and rehab) and second for ~60k (140k purchase and rehab). My goal was only 30k each, I think I did all right. I've got an opportunity to get consistent 20k returns in a different area which I think I'm going to move forward on while I keep looking for local deals (very hard to find). 10-20 flips a year at 20k isn't bad I figure.
Don't care what the returns are in Ohio, there isn't enough money as they say.
- Investor · Austin, TX · Member since 2015 · 222 posts · 58 votes9y
Originally posted by @Engelo Rumora:
Originally posted by @Jared Watson:
40%
Nice
Anymore info would be considered a promotion
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @Jared Watson:
Originally posted by @Engelo Rumora:
Originally posted by @Jared Watson:
40%
Nice
Anymore info would be considered a promotion
haha
Same on my end :)
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes9y
Originally posted by @Engelo Rumora:
Originally posted by @Will Barnard:
Threads like this are the worst for the newbie investor's reading them. They see 100% returns and based on your comments, believe they should be and can obtain the very same. The truth is, 99.9% of them will not because they do not have the experience, the expertise, the track record, the systems, the teams, and the list goes on and on.
If you are actually getting 100% returns selling flips as turnkey rental units to out of state investors, I would venture to guess many of them are overpaying for them and will likely be upside down in the very next downturn. I'm all for capitalism and making money but I'm not sure I could sleep at night knowing there was a high probability that my buyers will not come out ahead in the future. On top of that, this business model will not be as profitable or even alive at the next larger size downturn.
Point is, for all newbie investors reading this, finding a pocket location in the US that you can make these returns consistently is a pipe dream at best and stating that investor's should expect these returns or do something else is a very bold (and improper) statement. The one thing I do agree with is that I don't get out of bed either for a flip profit under $20k, but that comes with the exception of the new investor doing their first 1-3 deals where any profit is a bonus on their real life RE investment education.
Thanks Will,
I don't agree with your comment at all.
I have never blown wind about "how easy" flipping or investing is and always stress that hard work is very important.
As for selling turnkey and sleeping.
You have "ventured to guess" wrong.
I have one of the best turnkey companies in the country, that offers one of the best products, services and cap rates.
Our reputation also speaks for itself and we have not wronged any investors to date and don't intend on ever doing so.
It doesn't matter if this business model is alive or not, as long as the investors continue getting great returns for many many years which with great property management in place, I'm sure they will.
As the moderator on this forum, your comment is disappointing and uncalled for
Much success
Clearly you have failed to comprehend the point I was trying to make. I never once stated that you claimed flipping was easy or that you were blowing smoke. What I said was I did not like or agree with your title of your post and subsequent answer to your own question of 100% returns needed or do something else. That gives false hope to every single newbie investor reading this and that is a disservice to the community.
Secondly, true great cash flow is typically obtained by purchasing distressed properties at large discounts. Investors buying turnkey properties have to give up a good portion of that cash flow in trade for the convenience of not going through all that effort and work, that is where your profits come in and again, I stated I have no problem with that business model.
Lastly, my being a moderator is irrelevant to this conversation or my comments, I made no personal attacks against you (otherwise I would have had to moderate myself) and havevhe right to voice my opinion just as any other member does, so you have every right to be disappointed if you choose, but don't tell me my comments are correct McAllen for, to the contrary, my comments are appreciated by just about everybody here.
- Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes9y
Originally posted by @Will Barnard:
Originally posted by @Engelo Rumora:
Originally posted by @Will Barnard:
Threads like this are the worst for the newbie investor's reading them. They see 100% returns and based on your comments, believe they should be and can obtain the very same. The truth is, 99.9% of them will not because they do not have the experience, the expertise, the track record, the systems, the teams, and the list goes on and on.
If you are actually getting 100% returns selling flips as turnkey rental units to out of state investors, I would venture to guess many of them are overpaying for them and will likely be upside down in the very next downturn. I'm all for capitalism and making money but I'm not sure I could sleep at night knowing there was a high probability that my buyers will not come out ahead in the future. On top of that, this business model will not be as profitable or even alive at the next larger size downturn.
Point is, for all newbie investors reading this, finding a pocket location in the US that you can make these returns consistently is a pipe dream at best and stating that investor's should expect these returns or do something else is a very bold (and improper) statement. The one thing I do agree with is that I don't get out of bed either for a flip profit under $20k, but that comes with the exception of the new investor doing their first 1-3 deals where any profit is a bonus on their real life RE investment education.
Thanks Will,
I don't agree with your comment at all.
I have never blown wind about "how easy" flipping or investing is and always stress that hard work is very important.
As for selling turnkey and sleeping.
You have "ventured to guess" wrong.
I have one of the best turnkey companies in the country, that offers one of the best products, services and cap rates.
Our reputation also speaks for itself and we have not wronged any investors to date and don't intend on ever doing so.
It doesn't matter if this business model is alive or not, as long as the investors continue getting great returns for many many years which with great property management in place, I'm sure they will.
As the moderator on this forum, your comment is disappointing and uncalled for
Much success
Clearly you have failed to comprehend the point I was trying to make. I never once stated that you claimed flipping was easy or that you were bowing smoke. What I said was I did not like or agree with your title of thevpor st and subsequent answervto your own question of 100% returns. That gives false hope to every single newbie investor reading this and that is a disservice to the community.
Secondly, true great cash flow is typically obtained by purchasing distressed properties at large discounts. Investors buying turnkey properties have to give up a good portion of that cash flow in trade for the convenience of not going through all that effort and work, that S where your profits come in and again, I stated I have no problem with that business model.
Lastly, my being a moderator is irrelevant to this conversation or my comments, I made no personal attacks against you (otherwise I would have had to moderate myself) and havevhe right to voice my opinion just as any other member does, so you have every right to be disappointed if you choose, but don't tell me my comments are correct McAllen for, to the contrary, my comments are appreciated by just about everybody here.
Thanks Will,
Your opinion is much appreciated.
Much success
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