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Thread: Inside the Numbers
Real Estate Fix n Flip Edition
This thread is a full break down of the numbers, from start to finish, of a real and recent Fix n Flip that netted $50,000+
(continued on the next tweet)
Real Estate Fix n Flip Edition
This thread is a full break down of the numbers, from start to finish, of a real and recent Fix n Flip that netted $50,000+
(continued on the next tweet)
Fix n Flipping Real Estate can be extremely lucrative & one of the best ways to multiple your cash
Its also one of the easiest ways to lose money
Most investors have no idea the costs involved & net much LESS than predicted or lose $$$
The #1 rule in investing is don’t lose $$
Its also one of the easiest ways to lose money
Most investors have no idea the costs involved & net much LESS than predicted or lose $$$
The #1 rule in investing is don’t lose $$
First, master running the numbers
This is where nearly every investor messes up as they underestimate the amount of costs, fees, holding expenses, etc
Use my FREE analysis tool so that you can quickly underwrite the numbers like a pro https://store.lifeworthchasing.com/real-estate-underwriting-resources/buy">https://store.lifeworthchasing.com/real-esta...
This is where nearly every investor messes up as they underestimate the amount of costs, fees, holding expenses, etc
Use my FREE analysis tool so that you can quickly underwrite the numbers like a pro https://store.lifeworthchasing.com/real-estate-underwriting-resources/buy">https://store.lifeworthchasing.com/real-esta...
That free tool will allow you to punch in Purchase Price, Closing Costs, Financing Costs, Loan Amount, Estimated Rehab, Holding Costs, More Closing Costs
Then it will show you net profit based on your holding time
It is highly accurate and extremely easy to use
Keep reading
https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">
Then it will show you net profit based on your holding time
It is highly accurate and extremely easy to use
Keep reading
I want you to understand the basics!
Rule #1: Don’t lose money
Rule #2: Always estimate a longer hold time, a higher rehab budget and a lower sale price than what you think it will be
I recommend add 30 days, add 10% to your rehab budget and subtract 5% from your sale price
Rule #1: Don’t lose money
Rule #2: Always estimate a longer hold time, a higher rehab budget and a lower sale price than what you think it will be
I recommend add 30 days, add 10% to your rehab budget and subtract 5% from your sale price
Here are the initial estimated numbers of my recent flip
Purchase Price: $205,000
Rehab: $70,000
Sale Price: $370,000
I put 15% down, plus closing costs, pay holding costs and interest, and the lender would fund 85% plus all of the rehab for 9% Interest and 1.5 points
Purchase Price: $205,000
Rehab: $70,000
Sale Price: $370,000
I put 15% down, plus closing costs, pay holding costs and interest, and the lender would fund 85% plus all of the rehab for 9% Interest and 1.5 points
Here is my buyer’s settlement statement showing these numbers and cash to close
I had one surprise on this and it cost me $2,556 due to an HOA / Region Capital Improvement Fee
This is very rare, but when investing in a new region these are things to look out for
I had one surprise on this and it cost me $2,556 due to an HOA / Region Capital Improvement Fee
This is very rare, but when investing in a new region these are things to look out for
Prior to closing I will pay for all of the materials up front on credit cards, have a contract signed by contractors and subs, and a full design plan ready
I try and have all the materials in the garage or nearby storage so the contractors can get started right away
I try and have all the materials in the garage or nearby storage so the contractors can get started right away
I have a full list of everything laid out so the communication between me & contractors is minimal
They only contact me on surprises or when a "phase" is complete
Each week on Friday I pay the contractor for work COMPLETED
Monday I take a draw from the lender to replenish
They only contact me on surprises or when a "phase" is complete
Each week on Friday I pay the contractor for work COMPLETED
Monday I take a draw from the lender to replenish
Let& #39;s review my Rehab Budget:
Quick estimates I use a sliding scale of $25, $30, $35 and $42 per square feet depending on the extent of the rehab
This property needed nearly everything except HVAC and Windows, so I rolled with $35 when underwriting
Was I accurate?
Read onhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">
Quick estimates I use a sliding scale of $25, $30, $35 and $42 per square feet depending on the extent of the rehab
This property needed nearly everything except HVAC and Windows, so I rolled with $35 when underwriting
Was I accurate?
Read on
I had budgeted for a full rehab including new roof and all new plumbing
This rehab there were a couple surprises (window glass, electrical) that cost me some money
Always expect surprises once walls are opened up
Fortunately I did not need a new roof, so it mostly was off set
This rehab there were a couple surprises (window glass, electrical) that cost me some money
Always expect surprises once walls are opened up
Fortunately I did not need a new roof, so it mostly was off set
This was supposed to be a 90 day rehab, but due to Covid & vendor delays it ended up being 120 days
Thankfully I factored in the extra 30 days!
Pro Tip:
1. Only pay on completion
2. Have all little details figured out ahead of time, print them out, tape them to walls
Thankfully I factored in the extra 30 days!
Pro Tip:
1. Only pay on completion
2. Have all little details figured out ahead of time, print them out, tape them to walls
Ok the job is done, here’s a before and after
A few things to note:
1. My rehab went over by ~5%
2. My holding costs tracked under my estimate
3. I’ve gotten full rehab release from lender, paid off the CCs (Free Points)
4. Let’s get it cleaned and listed
Read onhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">
A few things to note:
1. My rehab went over by ~5%
2. My holding costs tracked under my estimate
3. I’ve gotten full rehab release from lender, paid off the CCs (Free Points)
4. Let’s get it cleaned and listed
Read on
" title="Ok the job is done, here’s a before and afterA few things to note:1. My rehab went over by ~5%2. My holding costs tracked under my estimate3. I’ve gotten full rehab release from lender, paid off the CCs (Free Points)4. Let’s get it cleaned and listedRead on https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">">
" title="Ok the job is done, here’s a before and afterA few things to note:1. My rehab went over by ~5%2. My holding costs tracked under my estimate3. I’ve gotten full rehab release from lender, paid off the CCs (Free Points)4. Let’s get it cleaned and listedRead on https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">">
" title="Ok the job is done, here’s a before and afterA few things to note:1. My rehab went over by ~5%2. My holding costs tracked under my estimate3. I’ve gotten full rehab release from lender, paid off the CCs (Free Points)4. Let’s get it cleaned and listedRead on https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">">
" title="Ok the job is done, here’s a before and afterA few things to note:1. My rehab went over by ~5%2. My holding costs tracked under my estimate3. I’ve gotten full rehab release from lender, paid off the CCs (Free Points)4. Let’s get it cleaned and listedRead on https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">">
I always shoot the be the best product in the neighborhood at the most fair price
(Think Bidding War)
There was not much inventory, so I priced at $375,000
Received a $371,000 offer the first week that had good terms
Accept… first offer is many times the best
(Think Bidding War)
There was not much inventory, so I priced at $375,000
Received a $371,000 offer the first week that had good terms
Accept… first offer is many times the best
Buyers completed inspections, but they have a Request for Repairs
They requested repairs or a $2,300 credit
I countered the list in half, got all the repairs done w/ a couple phone calls for $1,600
Often the credit is easier, but $700 was enough for me to spend an hour on it
They requested repairs or a $2,300 credit
I countered the list in half, got all the repairs done w/ a couple phone calls for $1,600
Often the credit is easier, but $700 was enough for me to spend an hour on it
So let’s review my estimated numbers compared to actual
Estimated:
Purchase Price: $205,000
Rehab: $70,000
Sale Price: $370,000
Projected Net: ~$50,000
Estimated:
Purchase Price: $205,000
Rehab: $70,000
Sale Price: $370,000
Projected Net: ~$50,000
Actual:
PP: $205,000
Cash to Close: $36,622
Interest out of pocket: $8,220
Rehab: 70k covered in Loan
Overage Rehab out of pocket: $3,500
Closing Repairs out of Pocket: $1,600
Holding Costs: $2,000
Proceeds: 102,427.83
Net: $50,485
PP: $205,000
Cash to Close: $36,622
Interest out of pocket: $8,220
Rehab: 70k covered in Loan
Overage Rehab out of pocket: $3,500
Closing Repairs out of Pocket: $1,600
Holding Costs: $2,000
Proceeds: 102,427.83
Net: $50,485
How accurate was my Quick Flip Analysis Spreadsheet?
Let’s take a look
Pretty spot on, and the closing costs and holding costs being conservative in the sheet, but lower in actual, was the buffer for my rehab and closing repairs
Let’s take a look
Pretty spot on, and the closing costs and holding costs being conservative in the sheet, but lower in actual, was the buffer for my rehab and closing repairs
So what am I doing with the $102,000
$36,000 will go back to my flip account
$15,000 will go back to my operating account
$50,000 will go to my business account that pays me my salary, invests in my 401k, etc
I won’t make any lifestyle changes, biz as usual
$36,000 will go back to my flip account
$15,000 will go back to my operating account
$50,000 will go to my business account that pays me my salary, invests in my 401k, etc
I won’t make any lifestyle changes, biz as usual
Final Note:
I chose House Flipping as a side gig to multiply my cash, it is not my main focus, and thats how I like it
I& #39;m very conservative with my numbers, I focus on high quality & minimizing expenses
I set minimum net profit standards so that its always worth my time
I chose House Flipping as a side gig to multiply my cash, it is not my main focus, and thats how I like it
I& #39;m very conservative with my numbers, I focus on high quality & minimizing expenses
I set minimum net profit standards so that its always worth my time
If you enjoyed this thread you can visit my website for my newsletter, blog and subscribe to my podcast
http://www.chasemaher.com"> http://www.chasemaher.com
And don’t forget to grab my FREE flip analysis tool
https://store.lifeworthchasing.com/real-estate-underwriting-resources/buy">https://store.lifeworthchasing.com/real-esta...
http://www.chasemaher.com"> http://www.chasemaher.com
And don’t forget to grab my FREE flip analysis tool
https://store.lifeworthchasing.com/real-estate-underwriting-resources/buy">https://store.lifeworthchasing.com/real-esta...
Ah shoot! I forgot to add the closing settlement statement
Here it is
Here it is