Flipping Homes: Making Money In A Down Market

In March I posted Analysis of a Bargain: 824 24th Street.  Well today I wanted to do a post-mortem follow up on how the sale of this flip property went.

You will recall we purchase the property for $49,900.  Our initial repair expense estimates were around $20,000 but the actual expenses turned out to be around $30,000.  Even after a thorough inspection we found some things that needed to be addressed.  To their credit, my clients have a penchant for doing things right rather than glossing over defects.  Therefore, you likely won't find the homes they are reselling landing back in the foreclosure cycle.

Here is a breakdown of the profit found in this property.

It took about 6 months to complete the rehab and sell the property.  Based on this situation, my clients experienced a one time return of 19% on their investment.  If you annualized this, say by doing two flips like this per year, the annual return on investment is almost 40%!

This just proves again that money can be made in this marketplace.  It takes the right combination of funding, contractors, and vision.  But, managed properly, it rewards everyone involved.  The investor makes his return, the contractor has work, and the end buyer has a great home to live in.