Ben Moskel - What are House Flippers Making Right Now?

Yesterday Ralph, a subscriber, sent us this question:

Is it possible to do flips and make a decent profit without doing the manual labor yourself? And if so, what is the average amount of money that needs to be invested into fixing up each property and what is the average profit after selling?

Here are answers to those 3 questions:

1. You don't want to be doing any of the labor yourself.

Your job is to oversee the flip.  You drive out to the property 2-3 times per week and check on the progress.

You should be doing your flips without touching a hammer.

This allows you to build and expand a real estate business that is sustainable over the long term.

2. Every flip has a different rehab budget.

Some flips require lots of work while others require only cosmetic repairs and upgrades.

The key is to get an accurate and realistic estimate of the costs before you make an offer on a house.

3. According to Realtytrac's U.S. house flipping report, the average gross profit per flip was $55,000 last year.

Redfin recently did a study showing the average gross profit per flip was $102,400.

Ben Moskel

The Redfin study included the purchase and sale prices from tens of thousands of flips.

Unlike Realtytrac, Redfin included the numbers from actual flips, and excluded certain transactions such as those between family members.

In other words, $102,400 gross profit per flip is likely more accurate.

IMPORTANT: This is the highest gross profit since Redfin began analyzing house flipping.

If you've recently decided to start flipping houses, your timing is right on the money.

Big Profits on a Small Flip - Ben Moskel

Here is another great potential flip

in Panama City, Florida for just $10,000:

Ben Moskel

This is a 3 bedroom, 2 bathroom 1256 sq. ft. home. in Panama City, FL.

Ben Moskel

The kitchen is rough, but since it is so small, it will be less expensive to replace.

Ben Moskel

If you look closely, you can see some mold or mildew on the wall.  While this scares off a lot of investors, it is actually relatively cheap to fix, as long as it has not caused structural damage.

Ben Moskel

If you look closely at this picture, you can see that this is a concrete block come.  This increases the value because of its extreme durability compared to wood.

Let’s look at the numbers:

Purchase price: $10,000

Rehab cost:  $25,000

Quick sale price: $59,000

Expected profit:  $24,000

By the way, I know some flippers who will flip houses in other states just for the adventure.

For example, they will find a good deal on a flip near Chicago in the summer.  They rent a cheap apartment for 2-3 months and knock out the flip.  They treat it as a vacation, since flipping a house does not typically require more than 5-10 hours a week of your time (as long as you are using contractors).

And since you traveling for the purpose of flipping a house, your entire vacation is essentially 100% tax deductible.

This isn’t for everyone, but it is something to consider if you are not tied down by a job or other responsibilities.

It’s a pretty neat idea if you think about it: you get to go an adventure and spend a couple months in a new exciting city and have an extended vacation while making a nice profit.