4. Factor in a decent profit margin.
If you can’t find a project with high profit based on your estimates, then keep looking. Profit is the difference between the end sale price and the original purchase price minus all entry, exit, renovation and holding costs as well as tax.
Profit = End sale price – purchase price + purchase cost + exit cost + renovation cost + holding cost + tax.
Keep in mind that the capital gains tax discount is not available if your project is less than 12 months. Capital gains tax is not applicable at all if you don’t sell. But if you don’t sell, then future growth prospects are more important than the renovation.