Is house flipping more risky than Blackjack?
I’ve made this statement several times on the BiggerPockets Podcast, and I’m a big believer that for most first-time house flippers – they would have better odds of making a fortune by playing blackjack than trying to flip a house without knowing what they are doing.
This happens to a LOT of new investors.
Because, frankly, there are a lot of factors involved when figuring out the potential profit on a flip, and if you screw up one of those numbers… well, you’re screwed.
Here’s the problem: A wannabe flipper can buy a house for $50,000, plan to put $20,000 into it, and sell it for $90,000. The wannabe says “yah! I just made $20,000!”
There are a lot of factors involved that new investors might not know. Things like:
- Repair overages
- Utility payments
- Loan fees
- Loan interest
- Buying closing costs
- Selling closing costs
- Agent Fees
- And a lot more
These extra costs can easily eat away any profit that you thought you were going to make. Trust me – I’ve been there (for more of my tale of woe, check out How NOT to Flip a House: An Embarrassing Story of Wasted Time, Money, and Opportunity.)
So how can a real estate investor ensure that they know all the numbers and plan for all the expenses when flipping a house?
Well, my friend… have I got a tool for you…
The Hero: The New BiggerPockets Fix and Flip Analysis & Reporting Tool
For the past several years, I’ve been using Excel spreadsheets to analyze properties, which do the work but can be a little cumbersome to analyze properties with (for example, check out How to Buy a Small MultiFamily Property: A Step by Step Case Study. It took me several years of tweaking to finally come up with a spreadsheet that worked well for me.
So then we had an idea… why not turn this spreadsheet into a fully functioning BiggerPockets web application – and that’s just what we did.
So this is the official announcement for the brand new BiggerPockets Fix and Flip Analysis & Reporting Tool – which is going to transform the way investors analyze their real estate deals.
I’m going to talk about a few cool aspects in a second – and why you should start using it today to make more money on your flips, but first, here’s a quick video I made explaining the new tool:
What the Fix and Flip Analysis & Reporting Tool Does
Essentially, the Fix and Flip Analysis & Reporting Tool allows you to enter in the basic information about a potential property flip and discover what your potential profit will be, using all the numbers.
This calculator is designed to make sure you don’t pay too much for a property.
The calculator will allow you to analyze profit, holding costs and more, calculate profit over a variety of different holding times and lastly, create a printable PDF report to give to lenders, partners, investors and others.
In other words – this calculator is going to make analyzing deals like 1,000,000 times easier.
Perfect for Wholesalers
This calculator is also perfect for wholesalers because it will help you get inside the mind of your cash buyer. Most wholesalers sell to house flippers, so by running the numbers ahead of time, you can determine exactly how much you should offer a motivated seller to buy their property for. This calculator will help you take the guess work out of making offers.
This is huge.
The PDF reports will take your professionalism to the next level, helping you find more cash buyers so you can get out and get on with the next deal as soon as possible.
Who Can Use the House Flipping Calculator?
Members of BiggerPockets get to test the calculator for a single property evaluation, but in order to use it past the one-time free trial, you will need a PRO Basic or PRO Account.
Right now, a PRO Basic membership is only $5 a month and a PRO membership is just $15.
There are a lot of other cool benefits of being Pro or Pro Basic as well – so if you haven’t already upgraded, now is the perfect time to do so. To upgrade right now, just click here.
Another Calculator: The 70% Rule Calculator
We are also excited to announce another tool to help all real estate investors – called the 70% Rule Calculator.
Yep – you guessed it – it helps you quickly determine how much to pay for a property based on the famed “70% Rule of Thumb” which states that you should pay 70% of the After-Repair-Value, minus repairs (and less any wholesaling fee.)
Obviously, this is just a “rule of thumb” and more in-depth calculations should be done (by using the House Flipping Calculator). However, this will give you a quick, 10 second ballpark number.
The 70% Rule Calculator is free for everyone to use, anytime – so go check it out today!
Are you still here?
What are you waiting for – go check out the calculators now!
Photo: Simon Q