It's pretty marginal.  

The market in Utah is really hot right now & as much as we are trying, we are not finding any buy & hold deals with good enough margins.  

This formula is the Profit Margin Formula that accounts, for 99.99%, of everything.

My definition of good is using full or close to full leverage on a property and still being able to get >25% margin (rent - expenses).  

If you’ve purchased your property with enough margin and this occurs you just take the face value of the policy, close shop on that asset, buy another, and possibly pocket a few bucks in the process.

There are a few larger rehab companies in the area who can afford to flip homes at a lower margin that your typical one-man rehabber/investor.For speaking with motivated seller off the MLS, I think 70% of ARC minus repairs is the best rule of thumb.

When you get into adjusting for square feet thing get a little more complicated when you look at values for the marginal (read: additional) sq ft.  

(either to fix/flip or fix/hold).....leading to a nice (40% gross margin) once completed.

it seems as if option #1 allows you to quickly scale with less money (basically furniture and a security deposit) but has the downside of lower margins since you're not building equity.I've also thought of other ideas such as buying a few properties under a llc with several other investors, where the total cash per person would be the same as if you bought 1 property by yourself but it's diversified across different markets and reduced risk.

And even in my hypothetical pullback, most people will be fine, a lot of prudent investors will have the reserves to pull them through a 3-5 hiccup and cover those marginal losses.