They move on and you make the rent margin over what you are paying the seller...

If I were to flip the home I just feel a bit uncomfortable since the margins are a bit thin. 

I do charge first month's rent, last month's rent, and security upfront for marginal credit cases (whereas I do not tend to collect last month's from those with good credit)...

@K.D Neider You will need to research the comps in the area, and all the costs a buyer will deal with (holding costs, closing, etc), and your profit margin.

If you are anticipating $40k in repairs (for example), do you budget $44k and then expect to make 20% profit... or do you budget $40k and understand any growth will lower the profit margin?

Index LIBOR margin 2.5%.

My profit margin is 20% of cost of project, not ARV. 

I just want to understand if this is a necessary step because it will cost more money and take more time, and intern affect the profit margin.

Hi Azita, I have worked with both, depending on your profit margin and what you are willing to spend, I would look for a "superintendent" with a contractor's license (NOTE: do not hire a handyman service, they will give you a ton of headaches, they only work for projects less than 10k) that means that they are the one's in-charge of the project while swinging the hammer, you could have most of the items pre-ordered from your local hardware or home depot (try their pro account, its great) and just have the workers pick it up (or delivered), and possibly have them spend and reimburse every week, that is just me and that is how I operate when doing a remote project.

Myself I am looking to buy for a fix and flip, so if your friend does find some wholesale deals with enough margin in it let me know.