ReCasa Financial Blog

As any seasoned investor will tell you, no two investment rehab projects are the same. Some repair lists come in over budget and others under budget. Some are large scale projects that take months to complete while others can be completed in a matter of weeks. All of these factors, coupled with the price the property is acquired for, go into calculating what an expected profit will be. Another factor in profit variation, is location. 

According to WalletHub, during this year’s first quarter, the average real estate property flip in the United States resulted in a profit of $63,500. It also reported the following locations have seen the highest gross return on investment over the past year:

·        Pittsburgh, PA

·        Philadelphia, PA

·        Cleveland, Ohio

·        Wilmington, DE

·        Buffalo, NY

The number of rehab projects an active investor completes each year is up to each individual, but studies show that the average number of flips completed in a year range between 2-7.  At ReCasa Financial Group, most of our investor clients complete 2-3 projects in a year. Although we help both full-time and part-time real estate investors alike, our typical investor is a part-time real estate investor with a “day job” looking to earn extra income.   

ReCasa Financial Group recommends that you determine your ROIC, or return on invested capital, by using the following formula.

Profit/interest = X

X (100) = ROIC %

With ReCasa Financial Group’s program, all charges and costs are rolled up into the loan amount. Assuming you draw out fully on the $74,500 you would pay interest of approximately $3,539 for that six-month loan term.

Of the purchase price of $100,000, $74,500 went to loan repayment, $3,539 in interest, and $6,000 in realtor fees. That leaves you with a $15,961 profit. Your ROIC would be 451%.

$15,961/ $3538.75 = (4.51) x 100 = 451% ROIC.” - What Will Your Investment Give You In Return, 2013

With today’s low interest rates, you could see a larger ROIC than ever before. ReCasa Financial Group continues to offer 100% financing for the purchase, improvements and soft costs on 1-4 family non-owner-occupied properties. Let us help you earn a high ROIC.