Probably the most important of all the factors is price. What you pay for your house can make or break the deal. Since the profit margin is typically 12 to 15 percent if you are doing everything right, you don’t want to waste even one percent by over paying.
How does one avoid over paying? The best way is to hire a top notch Realtor that knows the area you are shopping in. I recommend working with a Realtor that already works with investors.
Does price per square foot matter when flipping houses?
Not as much as you think. It’s all relative to what houses are selling for in the area. If the average house is selling for $150/sqft, and you find a house to rehab for $105/sqft then your getting a great deal.
What if I plan on buying to lease?
If you plan on buying to lease; my general rule is:
(Sales Price + Rehab Cost) / 100 = Monthly Rent
Ex. ($160,000 sales price + 15,000 rehab) / 100 = $1750/month
If the monthly rent is more than the market rent for that area, then you are paying too much. For more information on pricing your lease properties, look out for my blog post, “Getting more rent for your lease properties.”