How to calculate net profits when analyzing a property

Question

I know this may be a silly question, esp. since there are calculators that do could this for me.....  BUT.. I don't have full access yet to them. So I'm curious... I would like to learn how to analyze a deal better off the top of my head. More specifically, when strategizing to fix/flip a property, how can I be better at figuring out how much closing costs, seller/buyer fees, interests, etc., thus close to accurately estimating my  take-home profits? Any helpful advice would be appreciated ;-)

Edward Dean · Answer

For the transaction itself, speak with lenders and real estate agents in your area to get a handle on what is standard for your locality. Most lenders will require things like an origination fee, you may want to buy points, etc., and these can vary quite a lot so talk with a few. For your other closing costs, a good real estate agent should be able to give a decent ballpark or they can point you towards an escrow officer, title officer, etc. who can.

For the renovation, you can also start shopping around at the different vendors you plan on using for the areas you are looking to flip. See what the flooring you like is going for, the cabinets, talk to contractors at meet ups, etc. J. Scott's "The Book on Estimating Rehab Costs" is a good place to start to get a handle on what actually can go into a home flip and how are things priced (the actual price estimates may be a little dated now and may not account for higher cost of living area pricing but it's still worth reading to see how things are priced, ie, is it by linear foot, square foot, etc).

And of course, check the forums here and go to meet ups to talk with other investors about this too!

Best of luck!