Economic Model for Flipping Business

[Phil Long]

Can anyone share their Economic Model for a flipping business?  To clarify....if you made $1mil in revenue, and $400K in profit for the year, the 60% in expenses would be broken down by what?  I'm guessing it would look something like this: 30% cost of sale, 15% employee wages, 10% marketing, 5% misc (just as an example).  Any feedback is greatly appreciated.  Phil

[John Corey]

Originally posted by @Greg Dickerson:

@Phil Long this will vary greatly depending on the operator and the type of business.

If you are talking strictly wholesale net profits are usually only 25-30% after all cost the bulk of which are marketing around 50% or more and salaries or compensation taking another 20-30% for 1099 positions like acquisitions, dispositions, lead manger etc. Some people use virtual assistant independent contractors and some hire w-2. 

if you are rehab and flip you can be much more profitable if you outsource  the construction and minimize marketing costs and overhead to manage leads. Generally if set up correctly and you gross $1 million you could easily pocket 90% or more structured correctly. 

Greg, are you suggesting that a developer/rehab/flipper makes 90% profit? Or, did you mean a wholesale business would be at the 90% level? Noted that you suggested that the business would have to be structured correctly.