ARMS would be a good example of how one would need a PHD in finance to understand what's happening with indexes and margins.

If you can not stand to loose some money you should not be geting into building spec homes. 4) As you seem to have no track record it will be tough to figure the total cost of a project... hence you will not know what your profit margin would be and what your downside could be if the market turned on you.The beaty of flipping is that once the place is renovated you can rent or sell.

Go to: http://www.biggerpockets.com/recritic.htmlIt will help you calculate cash flow, rate of return, depreciation, gross margin, and more.

Just make sure that you can figure in nice profit margins for everyone involved BEFORE you bring the deal to them.

That is much lower (generally) than ORDINARY INCOME TAX which is your MARGINAL tax rate.

This is probably the easiest place (IMHO) to impact your margins and reduce costs / increase cash flows by doing it yourself with a few software tools.

So I'm talking about a 10% + / - margin.

The more involved the rehab the more I am going to insist on maintaining a 30-40% profit margin.

For example, if the house is a foreclosure and the seller is a bank, a cash offer may get you up to a 5-10% discount, in my experience.If the seller is a private seller, it's really going to depend on how desperate the seller is to get rid of the property and how much money he "needs" to make on the deal.For example, when I'm selling my properties, I like to get cash offers because it means less risk that the transaction won't close and it generally means a faster close, both of which are important enough to me that I'm willing to give a discount of up to 10% (depending on my profit margin for that particular property).Now, that said, some sellers are trying to get every penny out of their property, and the benefits of a cash deal (less risk, faster close) isn't worth trading any profit.

In the low-end, the margins are so tight, due to the volume of the large national builders, that there really isn’t any room to split profit, due a cost-plus or anything else.