Monday, November 09, 2009

Flipping Properties Require Margin and Fixed Expenses

The number one equation to take into account on this project is the margin. What is your cost to get into the house and the average sales price of a house in the selected neighborhood on a remodeled home? Obviously, you want this margin to be as high as possible. The challenge in today's market in hudson county especially in Hoboken and Jersey City, when looking at it nationally, is that many of the diamonds in the rough are located in areas where prices are still declining, so the investor must be sure to purchase the house, gut out the old, insert the new, and get out of the house before the declining price catches up with him and his profit.

Successful flipping is all about your margin. I would love to give you a set equation with fixed expenses, but every house is different. The challenge of a profit margin is that it can be quickly removed in a declining market or the negotiation process in a buyers market.

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