This is driving me crazy!

[excitingname]

Am I nuts for thinking I should be able make $20k on every deal?

Let me clarify what I mean by "make $20k".  I am talking about a "take home paycheck" of $20k (with the income taxes and Self Employment taxes taken out and put aside in another account for end of year taxes)   

I have not done a deal yet, am just getting started looking seriously and I am wondering if I have too inflated of an idea of what I can make.  Should I be aiming for $20k BEFORE income/SE tax?  That would give me a "paycheck" of  around $11340

It seems that when I do the 70% less repairs formula for buying, I get a "take home paycheck" of about $20k.  I am pretty confused.  I am just not sure what is possible.

I don't want to be greedy but I do want to make sure I am not taking on weak deals

[propertymanager]

I wouldn't spend a lot of time passing up good deals waiting for one with a take home check of $20,000.  If you can make $11,334 on a bunch of deals, that might be OK too!

Mike

[doommarine44]

I think he is wondering, if thats very possible.. or if its pie in the sky, I don't know or I would say!

[propertymanager]

doommarine44,

Yes, it's possible to make $20,000 "take home" per deal.  It is also possible to make $500,000 per deal "take home", doing bigger deals of course. 

Mike

[JaredfromIndiana]

The formula I used had us making $20,000 per rehab.  Then I actually started doing it and realized that in the market I am in I had to adjust my formula.  We are making $12,000-15,000 per flip now.  Yeah, I'm okay with that! 

[doommarine44]

I guess if you make 10k clear your doing ok

[JaredfromIndiana]

Right!  And if you clear $10K per and do 12 flips this year and 20-25 next year...  you do the math! 

[aak5454]

you have to really put this in the context of what is the property, how much work/effort are you putting into it and how much risk are you taking.  If you're doing <$100k houses that require carpet, paint and some bath/kitchen work, then that's pretty good.  If you're doing a 3000 sq ft house and really blowin' it out, then you need to be making much more than $20k

[doommarine44]

Yes of course, I was just saying on the easier stuff 10k is good.. I wouldn't do a hugeeeeeeeeeeee house and only make 10k that would be dumb!

[JaredfromIndiana]

Right aak...  all of our houses are under 100K.  Our last one we purchased at 45K, rehab/holding/closing costs 7K, sold for 67K. 

[excitingname]

Thanks for your replies everyone!

Great point aak.  I'm in AZ and entry level houses are retailing for 200-250 in town (built in 1980, 1500-1700sf, 3/2, 7500sf lot, not in dangerous neighborhoods.)  I'd be putting 10-20k into them for fixup on the deals I am seeing.

All the investors at our local REI clubs are talking about it being tougher to find deals now and I am just not sure if I should tie up my funds in lesser details or hold out for these $20k take home deals.  NO experience doing deals yet so I just don't know what I should set for a minimum profit.

I'm going to a fix/flip subgroup of our local REI club next week and also going to take a recommended fix/flip class (put on by our REI club)  I'll ask them their thoughts too.

For those who have worked with similar retail values, What do you think a profit should be on a house retailed for 200-250 wiht 10-20k rehab?

[JaredfromIndiana]

In my opinion if you are rehabbing a home that is valued over 200K you should make at LEAST 20K, but probably more.  Any help on this one guys or girls?  My rehabs are 100K and less.

[gilbequick]

My rehabs are 100K and less.

Why don't you do anything bigger?

[JaredfromIndiana]

That's pretty much the area I am dialed in on right now.  We are still in the somewhat early stage of building our business and have found this has worked very well for us.  Plus the areas where homes are listed at $100,000 - $200,000 are absolutely flooded with listed properties and FSBO's with not much moving.  Can it be done right now over $100,000 here?  Sure, but why would I set up a latter to climb 20 feet to pick fruit when there is plenty at eye level that tastes just as good?   

[Bluemoon06]

All real estate is local.  Some towns you can make $20k on every deal and some $10k is a good deal.  Look at the numbers and develop your strategy based on what is available where you are.