We've had great success on our two SFH long term rental properties, and one of the parts that I really enjoy in this endeavor has been the deal analysis. I've enjoyed creating and tweaking our own analysis tool to help us analyze deals.

I don't think we are interested in pursuing flips, but I'm curious to better understand the analysis side of this strategy to continue my learning.

I've tried to do some research, but I keep coming up with some areas that I'm not following. Can you help?

I understand that the most basic formula is ARV - purchase price - rehab = profit. I'm comfortable with all of those, but I know that there is so much more than goes into your return than just those three main levers.

Specifically, I'm getting hung up on 1) financing, 2) closing costs on both ends, and 3) holding costs.

- For any part of the project that you finance, whether it be purchase, the rebab, or both, do you simply look at the monthly loan payment for that leverage and multiply that monthly debt service payment by the number of months you expect to hold the property?

- If so, then that total (for example...monthly debt service is $2,000 and you underwrite at holding for 6 months, then you factor in that you have a total of $12,000 cash that you will be putting into the deal over that 6 month holding period) counts towards your "costs" or "cash into the deal" that you need to factor in, correct?

- Is there a general estimate proxy that you use for factoring in closing costs for the purchase and sale of the property?

- Is there a general estimate proxy that you se for factoring in any closing costs with the lender for the financing, assuming it is not an all cash project?

Coming from the buy and hold side of investing, I'm very focused on cash flow, cash on cash, and then looking at the other ways that I value a deal (appreciation, principal paydown, etc.). But as I think about a fix and flip, beyond just swagging an ARV minus your purchase price and minus the rehab budget, I know that there is so much more to the equation to understand a true return, especially as it relates to putting your own cash into the deal.

Thanks in advance!

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