Projected Profit vs. Real Profit in Flipping Houses

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Many of the house flipping reality shows use the term “projected profit”. In this video Marty Boardman explains why this is pie in the sky. A professional rehabber can never know for sure how much repair costs will actually be, or how much a retail payer will pay for the remodeled home. There’s almost something that comes up that reduces the bottom line.

20 COMMENTS

  1. I guess the 70 percent rule means nothing to you. Your making money but your purchase price and rehab cost should be no more than 70 percent of the actual market value. You are spending too much on these homes upfront killing your potential profits in the end. Your profits are actually way less than you claim if you consider insurance on the property, commission to the agent, and closing cost. Do the math.

  2. God bless you man.. you doing good and you just helped me for a life time.. i was stuck between careers .. I have been thinking about this for a long time .. thanks man …

  3. Hi Marty.. Thanks for the video. Hey I want to ask U something….. What is the reasonĀ and how much are the costs forĀ a house to be sold lets say in two months longer than what U expected it to sell? What costs are involved? Will the city fine U or somethingĀ like that? Thanks in advance for your answer…. God bless…

  4. Hi, can answer these questions for me? I will be grateful.
    How much money can actually be made from flipping houses?
    What's the usual profit that can be made from each house?
    What is the most anyone has ever made flipping an individual house?
    How much have you made flipping houses in total?
    Thank you!

  5. Just wondering why you aren't using MAO, Maximum Allowable Offer??
    That's exactly what they use on the reality shows, and what I use and my investor friends in the Nashville TN area use. My friend and mentor (not a guru) adjusted to 65% of ARV to make up for unforeseen things.
    For easy math take a house that's ARV (After Repaired Value) is $100 grand, subtract out 70% that is your holding cost: Realtor Fees, insurance, utilities, etc, which leaves you at $70,000. Then from there subtract your repair cost say $20 grand. So the price you would pay should be no more than $50,000
    Then your in it for $70 grand. You get a contract at $98,500, minus .92 for 6% Realtor fees and 3.2% buyers closing, your at $90,160.00 minus 3 months of holding cost at a grand each month = $87,160 minus $70 grand your into it for = $17,160 profit. The idea is not to go over budget but as you well know it happens.
    Not knocking you in anyway, you are doing volume and with volume is multiplied cash. Just saying MAO always works long as your rehab numbers are right. šŸ™‚

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