All Forum Posts by: Daniel Llauger

If you want to do it right , don't do all these calculation but
1. Find out the trend of PSF comps and its low and high range
2. Really really analyze the trend
3. When you purchase this house, how much is the PSF and the discount factor compare to #1.

You need to come with scenario where your rehab is inaccurate and run again the number.

I think we're saying the same thing with a different approach. There is a calculation you can use to get what your ARV should be. Once you have that number compare it to 3 or more comps. If the comps aren't matching your projected ARV then it's likely not a good deal.That 185K you have is probably about 17.59% short of my calculated ARV.

Good. Comps is the way to go.
Okay, I do things a bit differently: I start with the ARV (projected sales price) then, I subtract the selling agent's fees, selling closing costs, the purchase amount, the rehab amount and HML origination fees.

Then I list and add per month: HML payment, taxes, insurance, water, electricity, internet, yard maintenance, etc

So I have Oct, Nov, Dec, Jan, Feb each with the monthly amount and I add in a couple of blank months in case something goes haywire and it takes 7 months to sell instead of 5.

Then I have a couple of lines for things like HOA fees, swimming pool maintenance, etc.


Then whatever is left over from ARV after subtracting hard costs and holding costs, I come to a gross profit amount. Then I multiply that by my IRS tax rate and by the state tax rate, subtract those costs and I get how much is supposed to go into my pocket.

Keep in mind, it's all "best guess" until the final check clears the bank and you get your wire.

That’s the general idea. I may have left out a couple of expenses but I always start with the projected sale amount and subtract everything else. If there isn't a nice profit, I look for another opportunity.

I do something most flippers don't bother doing. I take the profit and divide by the number of hours worked to get the "per hour pay". If I can't make more than delivering pizzas, (a LOT more), then I don't do that project? ;-) My time has value.