If you're considering flipping houses, your top concern will almost certainly be how much profit you can expect to make. However, the average profit from flipping houses is a difficult figure to pin down. There are lots of variables that have an impact on profits, and this means that your profits could be more than $100,000 but they could also be as low as $0. So, how do you begin to calculate whether your house flip is really worth the investment?
The Average Breakdown Of Flipping House Profits
Although each property flip has its own individual circumstances and variables, it's possible to get average figures that help give you a basic idea of the amount you may be able to make.
According to the official figures, the average gross profit made in 2019's first quarter from flipping homes across the country was $60,000. Yet, while those numbers look attractive, there are some things you also need to bear in mind.
Firstly, this number is an average figure. Some people will make considerably more than this. However, there will be other people who make a lot less. Some will even make nothing from their flip.
Secondly, be aware that these are gross profits. They don't indicate the amount the flipper actually made. Rather, it represents the price difference between the selling price and the buying price. It doesn't take into account many of the costs that are associated with flipping. Repair costs, remodeling expenses, taxes, interest, utilities, and insurance are all sums that aren't included in the calculation.
While $60,000 may seem like an attractive number, you'll have to subtract the costs of your flip before you can determine the actual net profit you've made. So, which factors can affect the amount of net profit you can expect to make?
The Factors Affecting Your Profit
The best way to determine how much your net profit is likely to be is to use an online house flip calculator. However, to get a rough idea, here are some of the factors that can have a major impact on the amount of profit you'll be able to make from flipping homes:
Location - Location has a major impact on how much profit you can make from flipping homes. Some areas of the country are more profitable than others.
The property's original cost.
The amount you spent on renovating and remodeling the property - although you need to make the property look good to attract buyers, you should always be looking for ways to reduce your costs as a dollar saved on refurbishing the property equates to an extra dollar profit on its sale.
Supply and demand - current conditions in the housing market can have an impact on your profits. If it's a buyer's market, the price of homes will drop and you'll make less return on your investment.
Marketing and sales - banks and the property market will, in the end, put a ceiling on the amount your flipped property can be sold for. However, you need to ensure your sale is at the high end of the range. To maximize your selling price you need to ensure your marketing is on point. Ensuring the home is inviting, warm and well-lit and taking excellent photographs to show the property in its best light will help you to secure the best price.
