All Forum Posts by: J Scott

Quote from @Joe Gee:

Quote from @Greg H.:

The profit is the sales price MINUS all expenses including cost of the home, all repairs, closing costs on both transactions, loan costs, any interests, possibly mileage, marketing costs etc 

The part that is confusing me is because I used my own money than got reimbursed from the lender, then I used that money for more repairs and then received a total of 5 draws. I’m not sure how to calculate the actual repair costs because the repair budget I borrowed was payed back at closing .

The money you were "reimbursed" by the lender can be ignored.  This was a loan that was presumably repaid at closing, so while the money was given to you, it was also given back...net of $0.  Of course, the loan likely cost you money -- origination fees, appraisal fees, monthly interest payments, etc. -- and those things should all be added to your costs.

Btw, this is a good reason to use a separate bank account for your flips.  If you look at your bank account balance when the project is done and subtract the bank account balance when the project started, in theory, the result should be your pre-tax profit.

The purpose of the fix and flip calculator is to determine profitability of the flip, not to determine the total out of pocket costs you'll incur throughout the flip process.  Out of pocket costs and when you incur them will depend on a lot of factors, and will be specific to whatever your financing strategy is.

Also note that the downpayment isn't an expense.  The downpayment is buying equity in the property, and you'll get that back when you sell.  So, it's very different than the closing costs, which are an expense that you'll never get back.

Does that make sense?  Can you clarify what your goal is with the tool -- is it to determine profitability or how much you'll have to come up with to do the project?

Check out BiggerPockets books on flipping and estimating:

https://store.biggerpockets.co...
https://store.biggerpockets.co...

You're looking for a partner, but what specifically do you bring to the partnership?  Why should a seasoned developer partner with you versus partnering with someone else or working with his own team?

Do you already have a great deal locked up?  Do you have money to do the deal?  Do you have the experience to run the deal?

If none of those things, my recommendation is to find someone who does development and beg him to let you volunteer your time to him for a few months or a year in return for you getting to see how the business runs.

I've written on this a bunch in the past... It would be very difficult to sell a flipping business, for several reasons: they normally don't maintain inventory or much personal property, so there's little asset value; there's rarely any intellectual property; there's rarely any brand value; and there's not a lot of proprietary knowledge in the industry, so building a new brand from scratch has low barrier to entry.

Now, this isn't completely true. Companies like "We buy ugly houses" have been able to leverage their brand and trademarks to build value that can be franchised and sold.  But they are by far the exception, and their value is purely based on Brandon trademark, not any competitive advantage or intellectual property related to operations.

So, if you want to build a business that can eventually be franchised or sold, that's going to be the key... Building a brand that somebody's going to be willing to pay for. Not just building business.

Quote from @Derrick Gordon:

i read (listened to ) your book when I started about 5 years ago. I did not remember it having a SOW .. I did not read (listen to) the most recent version though.

Thank You!!

You must be thinking of a different book.  The Book on Estimating Rehab Costs doesn't have an audio version available.

The entire book is focused on how to create a scope of work, including both time and material costs, as well as timelines.

BiggerPockets has a whole book on the topic: The Book On Estimating Rehab Costs.

If you buy it on this site, it comes with a bunch of digital files, including a scope of work spreadsheet.

have you read the BiggerPockets book on flipping houses? That lays out a step by step approach to getting your first deal done.

That said, once you get a property under contract, The main goal is to complete due diligence and verify that all the assumptions you made when analyzing the deal are accurate.  This includes completing your inspections, verifying your expenses, and ensuring your resale value is accurate.

Here's my process, in detail:

https://store.biggerpockets.co...

Quote from @Brian Jackson:

Hey everyone I have a question to ask some experienced fix flippers or developers. Does anyone know of restrictions of taking a property like this and dormering it to literally copy the 1st floor plan and copying it on a 2nd story. Either having this as all part of 1 house or creating a 2nd entrance and making it a apartment/ adu

My thought process is this house is a 3/2 1600sqft for 289k. If I doubled this it should fetch double I'm my mind. A full dormer can be done in ny for 290-300k. Labor costs should be less in Florida than NY. So does this seem like a feasible plan? Does anyone currently do this. My realtor said she was unaware or thinks it would qualify as a multi family unit.  Even if that was the case and you could only do this in multi zoning. Why couldn't you do this and make 50-100k when you refi?

It really boils down to the zoning restrictions and if it's in an HOA, the HOA rules.

There are no standard zoning regulations across all of Florida, and if it's in an HOA, that will be the most restrictive.