Analysis for Fix and Flip

[Shulem Deen]

Hi all -- I'm new to real estate investing, but looking to get into SFR fix-and-flip. (I'm in NYC, and looking at properties in Hudson Valley and Upstate.) I'm hitting a big stumbling block, though, and wondering if anyone with experience can share some tips.

From everything I've studied, it boils down to three numbers: 1) Purchase Price, 2) Rehab Cost, 3) ARV. The formula being: Profit = ARV - Purchase Price - Rehab Cost.

The problem I have is getting reliable figures for 2 and 3 — Rehab Price and ARV.

For rehab price: getting a contractor to give me a ballpark estimate seems the natural approach, but that seems doable only for 1-2 properties. If I'm looking at a dozen properties, it's hard to ask a contractor to run around with me to them all.

For ARV: the right way seems to be to look at comps. But without experience, where do you get reliable numbers? I've asked my agent to run a CMA for me on some properties, but it seems impossible to know if it's apples-to-apples, given that I don't know if those are pre- or post-rehab. I can use the basic criteria (BRs/BAs, sqft, year built, etc), but one property might be a dump sold to an investor for a gut-job, and another might be a beautiful turnkey for an owner-occupant.

Anyone have any insight to share? Appreciate any and all thoughts.

Shulem

[Ryan Stuckey]

"The formula being: Profit = ARV - Purchase Price - Rehab Cost"

Please don't forget to include the very important TRANSACTION COSTS into your calculation or your "profitable deals" will be anything but. These are composed of BUYING, HOLDING, and SELLING costs and can eat up most or all profit on tighter deals.

Have you used any of the deal analysis tools or programs out there? These normally include calculations for transaction costs.