profit percentage
Hello, Forgive if this has been discussed before but I have just recently found this forum. I have been involved in a few rehab homes we have done and sold ourselves. We currently own an appraisal company in our area so we have a good feel for the renovated market values of the homes we rehab. My question to the experts here is do you look for or have a minimum profit percentage that you look to make from the homes you rehab?
That's a really good question, I've been thinking about that exact same thing myself. I'm looking to do a rehab and after all is said and done, with me having spent hours of my time and months of work, I should make about 20k. Seems like a pretty good deal to me but I talked to an investor friend of mine and he said he generally needs about a 50k profit for it to be worth his while. I'd be really interested in seeing what you experienced rehabers expect to make for it to be worth your while.
Really depends on how aggressive and greedy your are. Would you pass up a deal because you can "only make $15,000"? If you would, then that's great for everyone else.
I personally try to walk away with no less then $10-15K, minimum.
To your success,
[addsig]
Whether right or wrong I don't know. But I have been trying to keep a 12 to 15% margin. I guess I am greedy because I would take all the 10,000 and 15,000 deals I could handle. My problem is finding the money for the deals that are available. I guess this is a something that everyone must decide for themselves.
This is just an example of profit margins I prefer on each deal.
50,000 or less = 5k or more
75,000 to 99,000 = 10k profit or more
100,000 to 165,000 = 15k profit or more
166,000 to 200,000 = 20k profit or more
[addsig]
Kelly,
Do you find many deals in your part of Florida? Have you considered a hard money lender? Or are your deals no a fit for that type of financing (65-70% LTV)?
I am in So Cal where deals are few and slim. So I am considering doing rehabs in other parts of the US which would require a partner to, for example, locate the deals.
If you would like, email me at dieselcatt@yahoo.com. Perhaps we can work something out.
P. Serber