Before You Make an Offer This Week, Stress-Test These 5 Numbers
Happy Monday, BP community.
For anyone analyzing a fix-and-flip this week, here are five numbers I’d want to pressure-test before submitting an offer:
- Purchase price: Are you buying at a real discount, or does the deal only work if everything goes perfectly?
- Rehab budget: Does it include permits, contingency, and the items that typically appear after demolition?
- ARV: Is it supported by recent, genuinely comparable renovated sales and not just the highest sale in the neighborhood?
- Project timeline: What happens to the profit if the project takes three months longer than expected?
- Exit strategy: If the property doesn’t sell at the expected price, could you refinance and hold it, reduce the price, or bring additional cash to closing?
A deal can qualify for financing and still be a weak investment. The loan amount is important, but the project needs enough room for carrying costs, surprises, and a less-than-perfect exit.
If anyone is analyzing a deal this week, feel free to post the basics below:
- Purchase price
- Rehab budget
- Expected ARV
- Property location
- Experience level
- Planned exit
I’ll respond with the first questions I’d ask to help pressure-test the deal before it reaches underwriting. I’m also interested in hearing from experienced flippers: which of these numbers has caused the most trouble on your projects?