Profit on a $200k home

[Rebecca Clements]

Just curious as I'm using the fix and flip calculator, but what's the least amount of profit you'd want to make on a home where the ARV would be $200k? I'm just trying to get an idea of what's a good deal or not for fix and flips. Thanks in advance!

[Will Barnard]

We don't have homes in the $200k ARV range here but if we did, I'm not getting out of bed for anything under $25k. The time, effort and risk is not worth anything less plus you need to protect yourself from the times when something or multiple things go wrong. The last thing you want is to lose money on a deal. Now if you do it long enough, that will happen, but you want to avoid that by having enough spread to cover the downside risks.

As J stated, a 15% of ARV profit is a good minimum to go off of and anything above that will be your gravy. Once you get into higher end / higher priced properties, these numbers will have to change as it is not a one size fits all equation.

As an example, I sold a property a few months ago for $1.56M and the gross profit at the end was about $225k which ended up being a triple of a deal (baseball reference). Not easy to do in my market and often times, those price points will only get you just north of 10% of the ARV. I am happy making $150k on a $1.5M sale price since I also get RE commissions on top of it.