All Forum Posts by: Jonathan Batson

Hello BP!

I am new to real estate investing and working towards my first deal. I have a question about the preliminary analysis on house flipping. I am going through wholesale lists and reviewing comps for the properties in my price range. So I have the purchase price and the ARV. The wild card that I am missing is a preliminary cost for rehabbing the property to get to my ARV and seeing if the property is worth taking a look at to firm up the rehab numbers.

I am thinking of possibly adding a certain cost per square foot or even a certain percentage of the differential between the purchase price and the ARV but I don't have a clue where to start. Any suggestions are appreciated!

Thanks guys, that helps solidify my thought process.  I will add in the sale price that I expect to recoup at the end of my calc.  In the mean time I put up a screen shot of my model.   If you feel like it, let me know if you see any major busts.  Thanks!

I notice a lot of talk about the ROI of a real estate deal to assess the viability. In my line of work I was taught to calculate the Internal Rate of Return (IRR) when reviewing various ways in which to pursue a project. The IRR is a good way to assess which project option would be more profitable. Due to learning this I have been reviewing properties with their particular IRR. I wouldn't have thought that the two would be much different but I've noticed the IRR is much more conservative than the ROI calculation.

The reason I am asking this question is because I have been using the IRR calculation, with a goal of 15% - 20% to settle on a purchase price to submit to sellers. I feel it is continuously giving a low ball price that no one would accept. I also used the BP rent calculator and my IRR calculator to get a relative reference. The BP calculator gave me a 10% ROI while my IRR calculator was 1%.

More than likely I am way too deep in the weeds but I was curious if anyone else has ran into this issue and may be able to shed some light on the subject or have an opinion about this subject.

Thanks for the input Jason.  I'll get in touch with you Corey.

I am looking to invest in real estate with low money down.  I live in the greater Denver area and the real estate scene is fairly high priced making the 20% - 25% down payment out of my reach with my current savings.  Do to this I have been looking at real estate out of state.  Any advice on this, good, bad or neither?