What Is an Acceptable Yield on a Fix-and-Flip Property?

What Is an Acceptable Yield on a Fix-and-Flip Property?

What Is an “Acceptable” Yield?

There’s no universal yield target that fits every investor, but many seasoned fix-and-flip professionals aim for a minimum 15%–20% return on total project cost, including purchase price, rehab, holding costs, and selling expenses. For higher-risk markets or properties requiring significant rehab, even more cushion is advised.

However, the key is not just aiming for a target yield, but understanding what that yield really means after accounting for risks, time, and the opportunity cost of your capital.

Build in a Cushion: Conservative Return Estimates

One of the most common mistakes new investors make is overestimating the after-repair value (ARV) and underestimating rehab costs and time on market. Smart investors take the opposite approach: they estimate returns conservatively and always allow room for error.

• Use lower-end comps for ARV when possible.
• Pad rehab budgets with a 10–15% contingency.
• Anticipate longer holding periods to account for delays or market shifts.

Choose Improvements That Yield Dollar-for-Dollar Returns

The goal in any flip is to spend money only where it increases value. Avoid overbuilding or adding high-end finishes that don’t match the market. Instead, focus on:

• Modern, practical upgrades to kitchens and bathrooms.
• Curb appeal enhancements like paint, landscaping, and lighting.
• Structural and system repairs that eliminate buyer objections.

Know When to Take a Suboptimal Profit

It’s tempting to hold out for top dollar, but smart investors know when to take a smaller profit and move on. If you can recoup your capital and redeploy it, you keep momentum and preserve opportunities for better deals ahead.

If You’re Upside Down, Shift Focus to Damage Control

Sometimes, even with the best planning, things go south. If you’re upside down on a flip, it’s time to limit the damage:

• Sell quickly—even at a loss—to avoid deeper financial erosion.
• Explore renting as a temporary hold strategy.
• Stay emotionally unattached—this is a business, not a passion project.

Partner With a Lender That Understands the Real Numbers

Real estate investing moves fast. The right capital partner moves with you. You need funding that:

• Closes quickly and offers flexible draw schedules.
• Understands conservative projections and doesn’t push unrealistic returns.
• Supports investor-friendly loan structures that align with your deal.

Ready to Flip Smarter?

SLS Financial is more than just capital—we’re your financing partner. We understand the risks, the variables, and the urgency of the real estate investment game. Whether you’re buying your first flip or scaling a portfolio, we offer flexible, investor-friendly terms that empower you to take action when it matters most.

Let’s talk about your next opportunity before it slips away.