What is the minimum profit margin for a fix and flip?

[Brandi Vigil]

We live a market where inventory is extremely low and prices are high. Every fix and flip opportunity we look at, we will barely clear $10k-$20k assuming there are no underlying issues.  Can anyone recommend the minimum margins is acceptable for for a fix and flip?

[Greg Dickerson]

Originally posted by @Brandi Vigil:

We live a market where inventory is extremely low and prices are high. Every fix and flip opportunity we look at, we will barely clear $10k-$20k assuming there are no underlying issues.  Can anyone recommend the minimum margins is acceptable for for a fix and flip?

It really depends on the scope of work, time frame from acquisition to closing of the sale and the amount you are actually investing cash out of pocket. Not loan proceeds but actual cash you put up for down payment, closing costs, carry costs or total proceeds if you are paying cash. Then it comes a personal preference in terms of the cash on cash return you are after and the time value / velocity of the capital you're investing and other investment alternatives. That being said I like a 25-30% gross margin minimum, cash on cash per all cash deal in the upper 20's, leveraged 50% or better. This is on actual cash invested so the quicker you recycle the capital into and out of another flip the higher overall return on cash.