When it comes to flipping houses, profit is the name of the game. But what is the average profit on a flip house, and is there a maximum amount one can earn? Well, it all depends on various factors, including market conditions and the specific risks involved in the project. However, in general, a rehabber should aim for a profit range of 10% to 20% of the after Repair Value (ARV). To break it down further, let’s take a closer look at the concept of ARV. This is the expected value of the property after all the necessary repairs and renovations are completed. So, for example, if the ARV is $300,000 and a rehabber is aiming for a profit of 10% to 20%, that would mean a profit range of $30,000 to $60,000. Of course, this is just a general guideline and actual profits can vary greatly depending on the particular project and market conditions. Some factors that can impact profitability include:
Purchase price of the property
Cost of repairs and renovations
Holding costs such as mortgage payments, utilities, and property taxes
Selling costs such as real estate commissions and closing fees
Market demand and competition
In terms of the maximum profit one can earn when flipping a house, there isn’t necessarily a specific cap. However, a profit of 20% or more can be considered a home run in the world of rehabbing. Ultimately, it’s about balancing risks and rewards and making smart investment decisions based on your individual situation and goals.