My name is Jay I am new to real estate investing and I have two questions?
How do you know how much to spend on a house your are going to flip?
How do you know how much to invest in repair & rennovations when doing a flip so you can get the kind of returns you are looking for w/o over or underspending?
[QUOTE=jg1980;886139]My name is Jay I am new to real estate investing and I have two questions?
How do you know how much to spend on a house your are going to flip?
How do you know how much to invest in repair & rennovations when doing a flip so you can get the kind of returns you are looking for w/o over or underspending?[/QUOTE]
Technically there is no magic number that applies in all cases.
Just work the numbers backward. What will the property be worth when it is ready for sale, all fixed up, etc. The best way to say this is ARV.
ARV minus all costs (buying, holding, repairs, selling) gives you the profit. You then determine what sort of profit you expect and decide if the deal stacks up for you. If it does not, can you legitimately reduce the costs or raise the sale price? If the numbers do not work for you, continue looking for a deal that does work.
If you find you can never get the numbers to work, either you are doing something wrong of the profit margins are just not possible in your market. Time to do something else in that case.