Regarding the evaluation of property flipping, profit per transaction is the number you most often see. While a $40,000 profit may seem to be the same for each project, in reality, time value makes all the difference.
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Including the necessary calculator If a buyer acquires a house for $ 200,000 and spends $ 40,000 on upgrades and $ 10,000 on closing and carrying costs, the total expense is $250,000. Using a $290,000 sale price, the profit is $40,000, which equals a 16% return. Most professional flip figures finish here, but leave out one important factor: how long the $ 250,000 was “deployed.
Flipping Property Profit Changes Shape Once You Divide by Months
Think of your same $40,000 profit, but over three different timeframes. Published timelines on flips can vary widely. Resi Mpli estimates that a typical flip can take anywhere from two to six months.
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New Silver reports that experienced investors aim for a six-to-nine-month flip, and holding periods can go as high as 12 months.
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Gatsby Investment’s passive flip projects have come in at eight to 14 months. We’ll use four, eight and 14 months here as the three sample timelines.
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Months the $250,000 is tied up | Profit per month | Simple annualised return |
4 months | $10,000 | 48% |
8 months | $5,000 | 24% |
14 months | $2,857 | 13.7% |
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For the very same property making the very same $40,000 earnings, extended out to a fourteen-month period, the monthly rate is less than 30% of what it would have been in a four-month period. Those figures are based on simple annualization and do not consider reinvestment, but the difference is significant.
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Put simply, a 16% return is good or bad. The calendar book makes that decision.
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Profit per transaction it shows total profit; profit per month is the profit of capital over the period of its investment.
Investing Strategies Side by Side on One Clock
Each approach has its own duration. Some have finish in a matter of a few weeks. Others will take place over multiple years. While comparisons based only on profit per deal hide these differences, the ranges provided by each source studied for this piece have been reflected in the table below.
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Strategy | Capital needed | Typical clock | Typical payoff |
Wholesaling | As little as $10 in earnest money | 7 to 30 days | $5,000 to $15,000+ per deal |
Renovation flip | Tens of thousands for purchase and rehab | 2 to 12 months | $30,000 to $70,000+ per project |
Passive flip investing | From $10,000 | 8 to 14 months | Lump sum about 30 business days after sale |
BRRRR hold | Purchase plus rehab, mostly recycled at refinance | Multi-year | Rental income plus equity |
Live-in flip | Your own home | Two of the five years before sale | Up to $500,000 of gain excluded (US rules) |
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Number One: Wholesaling is the quickest of the three. It is the smallest payout, and the wholesaler truly never holds the asset. The middle ground: Flipping is a nice middle ground – more money per deal, takes several months to complete and takes a large amount of work from you.
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BRRRR gives up speed for inventory. The accounting comparison of flipping to holding is dealt with elsewhere, but it’s applicable here for one reason: it gives you a much longer runway, allowing you to realize income through rent and equity instead of one big check.
What Moves the Clock When You Are Flipping Property
How long does a flip take? The amount of work involved is one of the biggest factors for how long you can expect a property to take to flip. I like to make a distinction in how Planner5d categorizes a cosmetic flip (paint, flooring, light repairs) versus a full flip (electrical, plumbing, floor plan changes).
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Financing is yet another. Lima One reports that cash investors typically close and finish rehab more quickly than construction loan investors who draw funds in increments. Permitting and demand are also factors and each have a life of their own.
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“Retirement released Egypt Sherrod in HGTV has set a tight time frame: 30 days for rehab and 30 days for marketing and sale. Very few projects are done in that window. Use it as a goal rather than an assumption for planning.”
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The delay has a quantifiable cost. Let’s say, for example, the holding costs are $2,100 per month, representing loan interest, taxes, insurance, utilities, etc. That three-week permit delay costs you $1,450 before you even begin your next set of trades. This number is for illustration purposes only, but it’s the same every time.
When Flipping Property Is the Wrong Strategy for Your Clock
They may also not always seem so great after tax. According to Bigger Pockets, U.S. investors who own a property for a year and a day at a minimum can often pay 0%, 15% or 20% long-term capital gains taxes. Whereas if you sell within twelve months, you will pay short-term capital gains rates up to 37%. Just this one rule can turn a lucrative flip into a long-term buy.
Bigger Pockets lists three more options for when flipping is not producing the expected profits. The investor can live in the house for two of the five years before selling. They can use the BRRRR strategy.
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Or they can delay the profit as a 1031 exchange upon sale and reinvest.
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Australian tax law is different so check with an accountant whether a resale is an income or a capital gain before deciding on a holding period.
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These are not a step back from property flipping, but a slightly different time horizon that will incur its own taxes and workload.
Three Clock Tests Before You Pick a Strategy
Ask three evaluative questions of any deal before you make an offer.
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Let’s start with: how many months can I leave the capital invested? If the money has to go back in 90 days, a flip or multi-year hold with a total renovation fails this test before you do the math.
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Second test – what happens to profit/month if I double the timeline? See table above. An extended plan (pro-rata) from four months to eight months halves the monthly rate. If a deal is still feasible at twice the timeline, it has real margin; if it succeeds only in ideal conditions, it’s a rough estimate.
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3rd test: How many hours will it take for the investor? A high-margin flip that requires eight months of evening time may be less appealing than a smaller, and more passive, deal. Time is a cost too — it’s not included on the settlement sheet.
How FlipSync IQ Keeps the Clock Visible
Investors tend to be obsessed with budget tracking, to the exclusion of the calendar. This leaves the key driver of return unmeasured. Flip Sync IQ solves this by putting both budget and calendar on one page.
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All holding costs match actual dates, while the ROI dashboard compares projection vs. actual, as costs are incurred.
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The Flip vs BRRRR analyzer applies the same property to both exit strategies, across 25+ financial metrics.
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This is a necessary structure because investment return strategies can only be fairly compared if they are measured over the same period. Spreadsheets specific to a single exit will not accurately model what the other strategy could do in the same period.
Choose Investing Strategies by the Clock You Can Afford
The property flipping model favors early finishers, so long as the quality suffers no. A $40,000 profit in four months is a different asset than a $40,000 profit in 14 months. The profit per month beats the profit per deal in terms of transparency.
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The best investments for one person are the ones that their capital, taxes and timeline can sustain. Wholesaling is best if you don’t have a lot of capital and time. Renovation flips work best if you are able to take on a project.
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Passive flips and BRRRR holdings are best if you are comfortable with a longer, less frenzied timeline.
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Not one of these has an advantage on every metric.
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Buyers and investors are welcome to assess their potentially envisioned deal on the horizon before them in the concept of time rather than merely in the spirit. Flip Sync IQ trial is now open to all free for 30 days to show your profit per month and profit per deal with your data.
Frequently Asked Questions
How do you calculate profit per month on a property flip?
Total profit is divided by number of months invested in the deal (total return and how many months money was in the deal for.) It accounts for months from purchase settlement to sale settlement, so it is not specifically just the renovation months. $40,000 profit divided by eight months= $5,000 per month.
Is wholesaling a lower-risk investing strategy than flipping property?
Low capital risk to wholesaler who does not take the title or use financing to renovate. Resi Mpli rates wholesaling risk as Low, when contracts are executed correctly; flip risk is rated as Medium to High. The payoff per deal is commensurately less.
Why do published flip timelines range from two months to fourteen?
This variation is a project scope issue. A seasoned flip can be executed far more quickly than a passive syndicated project requiring acquisition, full construction and sale. Make sure that you are comparing timelines in the context of the same scope of renovation.
What is a live-in flip, and who is it for?
A live-in flip involves buying a home, living in the home as the main residence, and remodeling the home while it is still your main residence. According to U.S. tax code, up to $500,000 of gain may be excluded if the investor lives in the property for two of the last five years. Live-in flips might be great for investors who can tolerate a construction zone in their home.
Do cash buyers really flip faster than investors using construction loans?
According to Lima One, cash buyers typically settle and rehab properties faster, as construction loans take time to fund in phases. The staged draws involve more inspections and delays, resulting in longer timelines and higher holding costs.
Which investing strategies suit an investor with limited starting capital?
Wholesaling can be done with very little money or sometimes simply an earnest deposit. Passive flip investing can be done with as little as $10,000 in some case structures. Each holds that buyer controls or profit size is traded for lower cost of entry.
Table of Contents
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