How do you analyze your flips?

9 Replies

I'm reading the book called Flip and in the book they have a model where it goes like this

ARV

-Repair Cost

-Quiet Cost

-Minimum profit

__________________________

(How much you should offer)

My question is does anyone else use this formula to do deal's and is it reliable?

@Adonijah Short It is reliable as long as your repair estimation and your ARV is accurate. And calculate closing costs and realtor fees

yep I would add lenders fees etc as well.

I use a homemade calculator I made in google sheets. It includes financing charges, realtor fees, insurance, closing costs. Those little costs can sneak up on you if you don't account for them. I like to stay at 65% LTV or lower on my flips. The more wiggle room the better! Good luck Adonijah

It probably depends on your market and where you plan to find houses. I don't ever see the 70% - rehab deals, too much competition.

Personally I created my own spreadsheet to run my rehab numbers, holding, closing costs, etc. I add in my profit, and it spits out what I can offer.

Flip is a good book, but the devil's in the details and the accuracy of those numbers are dependent on many factors.  I believe in that book they use rules of thumb/percentages for Quiet costs for example, which are too imprecise (and too low) for me to be able to use to determine my offers.

Here's a BP blog post I wrote with a list of costs you might expect in the Quiet costs category, 

https://www.biggerpockets.com/blogs/8814/70530-fix...

and you can see how fast that can exceed the FLIP percentage rules of thumb of: 

Buying 1.50%
Holding 1.50%
Selling 6.50%

Cheers!

Kuba

I always calculate my rehabbed ARV ahead of time based on MY own comps and am conservative. Sometimes it works out to be more, maybe quite a bit more, but never less.

Then:

Purchase price

Closing costs

Lending/hard money costs (if applicable)

Rehab cost (plus 10-20% depending on size of rehab)

Carrying costs, utilities, yard upkeep, etc.

Might be missing something above, but think that's all of it.  Always plan for 3-4 months ownership.  Could change depending on the market and the amount of rehab, but 3 is pretty close where I am now if the rehab is fairly standard, say a month give or take.  And figure 94-95% of sale price at the end and do the math.  If the worst case scenario numbers come in with something I can live with, I'll generally pull the trigger.  If not, then move on to another deal.   Good to be conservative and be happily surprised than figure best case and be disappointed.  Always more costs than you think.    

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