# Factoring Profit Margin for a flip

Hi,

When flipping a property, what are your parameters? Is there a general rule of thumb?

Do you project to make a certain percentage profit? (I’ve read 15%)
Do you buy only up to a certain percentage based on fair market value? (I’ve read 70%)

For example, if a house is worth \$200K after renovations, than you would buy the house for only up to \$140K. (\$200K*.7=140) Then you would expect your profit to be \$30K after renovations (200*.15=30).

Is this realistic?

I’d love to hear your rules when flipping.

Most seem to use 65 to 70% of ARV - repairs. You can check the 123Flip or FlippingJunkie blogs for lots of information on the deals they do.

So if a home has an ARV of \$200k and needs \$30k of repairs, they’re going to be offering in the \$100 to \$110k range.

A few logic points. With an ARV of \$200k, they will likely list at \$190 to sell faster due to their high carrying costs. They also tend to figure about 10% of sales price in concessions/fees to close. That knocks them down to \$171k at closing. If they’re \$140k into the property plus carry fees of \$5 - 8,000 they’re looking at a profit of about \$20,000 to \$25,000.