House Flip Profit Estimation

[Justin Nahas]

Hello,

I hope everyone is well. I am a newbie investor, and I am trying to setup my spreadsheet to calculate my profit estimation on house flips. I will be using a hard money lender to partially finance the purchase of the property and to fully finance the rehab costs. In this example, the down payment is 10% and I added $5,000 to include the wholesaler's fee. I have an example below: 

Does the estimated profit seem right based off of the numbers? I am confused on how to estimate my profit when I have to put a down payment. 

Purchase Price	$95,000.00
Estimated Repair Cost	$40,000.00
ARV	$189,000.00
Purchase Price	$95,000.00
Purchase Closing Costs	$3,800.00
Repairs	$40,000.00
Holding Costs (W/S/G/PUD/etc)	$6,000.00
Down Payment (Skin in the game)	$15,000.00
Total Invested	$144,800.00
Total Cash Needed From Lender	$129,800.00
Points charged by lender	2.5
Points added to loan+ servicing fee	$4,745.00
Total Loan Owed Lender	$134,545.00
After Repair Value	$189,000.00
County Excise Tax Rate	1.53%
Excise (sale) tax amount	$2,891.70
Realtor Fees 6%	$11,340.00
Our Closing Costs	$3,000.00
Their closing costs (they'll ask)	$3,000.00
Total debits at closing	$20,231.70
Total cash received if sold now	$168,768.30
Total Money in The Deal	$149,545.00
Total Profit (pre-income tax):	$19,223.30

[David Robertson]

A down payment is not a cost to the project.  A down payment is equity that you are investing into the deal to pay for the costs so it should not be used in the profit calculation. 

In the most simple terms, the profit is income minus expenses

The detailed profit calculation on a flip is as follows:

Profit = After Repair Value - Purchase Costs - Repair Costs - Buying Costs - Holding Costs - Selling Costs - Financing

Profit = $189,000 - $95,000 - $40,000 - $3,800 - $6,000 - ($11,340 + $2,891.70 + $3,000 + $3,000) - $4,745

Profit = $19,223.3

So it looks like you are calculating the profit correctly, but the process you are using to calculate it is pretty confusing in my opinion.

One other comment, I don't see lender interest payments in your calculation?  It looks like there is $4,745 in points/fees upfront, but I don't see the actual interest paid to the lender...