3 numbers I run before bringing a flip to an investor
I work with investors here in Atlanta with off-market fix and flip deals, and one thing I've learned is that the deals that actually work depend on the same 3 numbers.
1. ARV based on good comps
- I like to pull comps that actually sold within the last 3-6 months not just the ones that were listed. I also use a good comparable radius. Using the nicest house that sold miles away is misleading to use as a comp.
2. Rehab cost with wiggle room
- Everyone budgets the renovation, but few budget for the unexpected. I've started treating this as a part of the actual budget so there are no surprises later on.
3. Days on market estimated based on your exit strategy
- A comp selling for the right price doesn't mean it sold fast. Checking the average days on market at your price point is a game changer. Holding cost eat away at margins quietly and its usually where people lose money.
I know that none of this is groundbreaking news, but I see deals fall apart all of the time when these numbers get rushed or overlooked.
What other numbers do you check when running number on your flips?
Most Popular Reply
Hey Asija, Another one that gets overlooked is the downside ARV. If the expected ARV is $400K, I like seeing what happens to the deal at $380K or $360K and with an extra 2–3 months of holding costs. If the deal still works reasonably well under that scenario, you have a much better margin for error.
Especially in the current market, I think profit margin under the downside scenario can tell you more about the quality of a flip than the projected profit under the best-case scenario.