Flipping Houses

How to Analyze a Fix and Flip: A Step by Step Case Study

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP, Real Estate Investing Basics
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Fix and Flip

“I hate math!”

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How many times have you muttered that frustration in your life? Even for a math nerd like me, there are times I hate math. However, if you are going to be a successful real estate investor, math is part of the package. This is perhaps most true for those looking to fix and flip a house.

When flipping, simple math errors can result in huge profit losses and discouragement.

It sucks.

However, success is not a mystery. I believe learning how to properly analyze a flip is the first step in a successful and lucrative career in house flipping – and it doesn’t have to be difficult or scary.

In today’s post, I created a video to walk you through the exact steps I use to analyze a fix and flip deal and determine how much potential profit could be made. I am going to be using the new flipping calculator from BiggerPockets, but you could do the same calculations with pen and paper if you needed to.

Take a minute and check out the video below for a step by step walk through of how I analyze this property for a potential fix and flip.

Photo: Byron Barrett

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather, and How to Invest in Real Estate, which he wrote alongside Joshua Dorkin. A life-long adventurer, Brandon (along with Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.

    john milliken
    Replied over 6 years ago
    very cool tool. was going to ask how you can eliminate the loan section, and after trying the steps, there is a cash purchase option to click that get’s rid of the loan section. once again, very cool tool, and very clean presentation brandon
    Brandon Turner
    Replied over 6 years ago
    Thanks John! Glad you are enjoying it. Let me know if you find any quirks/bugs/etc! We’ll be updating often to make it even better!
    David R
    Replied over 6 years ago
    That PDF report is awesome! Loan officers, partners, and investors are gonna LOVE this! Great job on creating that tool!
    Joshua Dorkin
    Replied over 6 years ago
    Thanks David! I’m glad you like it . . . please spread the word! Hopefully we can get flippers using it and lenders referring their clients to it.
    Glenn Schworm
    Replied over 6 years ago
    Great video, and very cool tool you have created. We have a very similar spreadsheet we use, but I like how yours turns to a PDF. Great stuff! With all this info on here, it is pretty tough for someone to fail! Seriously! They just need to start!! Great Job Brandon as always.
    Joshua Dorkin
    Replied over 6 years ago
    Thanks Glenn – I’m glad you see the value in the tool . . . we put a lot of time and energy into making it what it is today!
    Glenn Schworm
    Replied over 6 years ago
    Believe me when I say…I KNOW! Those tools are so necessary and so time consuming to develop but they are so worth it. Your design of it has elevated our thoughts to a new level. We are currently setting up Salesforce for our company to operate in the cloud and we had planned on importing our spreadsheets, but after seeing what you built, we are considering doing the same in out internal system. Seriously, nice job! I know all to well how much time goes into those tools.
    Brandon Turner
    Replied over 6 years ago
    Nice Glenn! Let me know how the Salesforce goes – I’ve yet to play with it, but I’ve heard good things!
    Brandon Turner
    Replied over 6 years ago
    Nice Glenn! Let me know how the Salesforce goes – I’ve yet to play with it, but I’ve heard good things!
    Brandon Turner
    Replied over 6 years ago
    Nice Glenn! Let me know how the Salesforce goes – I’ve yet to play with it, but I’ve heard good things!
    Brandon
    Replied over 6 years ago
    You guys have done a great job building a very useful tool. I have just one small suggestion to throw out there. Everything is very professional using industry language except ‘Cash you need to have:’ Can that be changed to ‘Total Cash Investment:’ or something along those lines? I think it would have a bigger impact when presenting to lenders or investors.
    Brandon Turner
    Replied over 6 years ago
    Hey Brandon, not a bad idea. I was trying to find a good way to communicate that this was the cash you had to have, and couldn’t come up with a better phrase. I like “Total Cash Investment” or maybe “Total Personal Cash Invested”- thoughts?
    Brandon
    Replied over 6 years ago
    I tend to like the idea of reducing the amount of words while maintain the same message. Is there a downside to omitting the word ‘Personal’ from Total Personal Cash Invested? In commercial real estate we would call this category Total Cash Equity, but I think it may not be intuitive for people coming from non-real estate backgrounds and could get confused with appraisal equity. At the end of the day, Total Cash Investment feels like the right wording to me.
    Brandon Turner
    Replied over 6 years ago
    Yeah, me too. The only reason I added “personal” was to differentiate between the total investment (including hard money or financing) and the money coming out of a person’s pocket. Really, something like “Wallet Investment” is what I’m trying to communicate. I’ll get some more perspective as well and we’ll see what we can do! Thanks so much for the help!
    Nick F
    Replied over 6 years ago
    How about cash down payment?
    Michael
    Replied over 6 years ago
    Hey Brandon – Just started checking it out & will offer some feedback. I use a few different ones so will compare them. I had a problem saving to a pdf. I got a message though so you were probably aware of the problem.
    Brandon Turner
    Replied over 6 years ago
    Thanks Michael! I’d love to get your thoughts on it!
    kim
    Replied about 6 years ago
    Thanks Guys! for the awesome tool! I will start using it now! Reply Report comment
    kim
    Replied about 6 years ago
    Thanks Guys! for the awesome tool! I will start using it now!
    Brandon Turner
    Replied about 6 years ago
    Awesome Kim! Let us know how it goes! Reply Report comment
    Brandon Turner
    Replied about 6 years ago
    Awesome Kim! Let us know how it goes! Reply Report comment
    Brandon Turner
    Replied about 6 years ago
    Awesome Kim! Let us know how it goes!
    Michael
    Replied about 6 years ago
    Very nice. Typo alert: under Other Miscellaneous Closing Costs: expand section: Other Misc. Closing “CLOSTS.” Thank you for the great tools and information!
    Reggie Maggard from Blue Springs, Missouri
    Replied about 5 years ago
    Brandon, How accurate is this tool? Was it accurate in this particular video example?
    Blake Watkins from Fort Worth, Texas
    Replied over 4 years ago
    This is so helpful! Thanks for the information guys!
    Ben Browning Investor from Vancouver, Washington
    Replied over 4 years ago
    Awesome tool, thanks for sharing! I went ahead and developed my own excel sheet based on this just to better understand the flow and allow me to customize as needed. I used the same numbers as the video to verify. One issue, I can’t see how the misc closing costs calculated into the total projected profit… the numbers are telling me this was totally omitted. Using (ARV)-(total project cost)-(holding costs)-(real estate agent fee)=Total Profit, I get the same number as the video, but shouldn’t the misc closing costs have been subtracted from the total profit? Am I missing something? I’m new to all this, just trying to wrap my mind around every aspect that I can. Thanks again, I’m absolutely loving this site!