Fix And Flip Excel Investment Analysis Spreadsheet You Must Use To Succeed - Free

hi it's jay green i'm an experienced flipper and i wanted to share with you this spreadsheet if you are interested in flipping or you're an experienced flipper right now you should be using my spreadsheet to be analyzing and considering every single flip you're going to be buying or consider buying this spreadsheet will keep you out of trouble it'll help you determine what you should be paying for these properties here in southern california and also um um you know helping you and analyzing determining how much net profit pre-tax net profit you're going to make from these flips so i'm just going to walk you through this spreadsheet i created i've flipped over 100 houses the last 12 years i'm actually in the process of writing a book on the subject because i want to share my experiences with you so you make money you stay out of trouble and you keep your flipping profitable um as you know right now the california real estate market as of right now it's december 2020 the market is incredibly hot it's it's great if you're a seller but it's a real challenge if you're a buyer or a flipper trying to buy a property right now in the current economic climate so let me walk you through the spreadsheet and i'm going to show you um how to analyze a deal and um with the four main things that you want to consider when you're buying a flip the four main things are what are you paying for it that's one of the most important things in a flip because the other factors are going to be relatively constant meaning what it's going to sell for you should be able to establish that number and then also your rehab how much you going to spend for labor's and material to fix up the property when i started about 12 years ago full time flipping my average flip cost me about 35 000 maybe 40 000 now it's much higher it's like 55 60 000 contractors are really busy right now and material costs have gone up quite a bit so it has labor and so if you to get to make a good flip and have the quality turn out really good you need to spend money to do it properly so let me walk you through my spreadsheet so what i normally do is i start with an address here so 1 2 3 elm street and i'm whittier let's say the property is in woodier and then i'm just going to put in today's date and the reason i do this only so i can go back and references or tweak my spreadsheet as i'm analyzing any property i can quickly find it saved in my computer and then i'll save it up here in a name and a folder so what we're going to do is let's start with a property that you found a realtor has brought this to you or you're a realtor and you've found it on the mls or you've sent out some mailers or you've knocked on a door and you found this property that a realtor or a property owner wants to sell you so let's say this realtor is going to sell you or this property owner is going to sell this property to you for 475 000 that's what you're buying it for so you're going to put in here in purchase price you're gonna put in right there 475 000 for the purchase price and then the next thing i'm going to do is i'm going to determine how much the repairs are going to cost me now you can take a contractor over to the property which is ideal but when you're analyzing deals and you're trying to make a quick decision there's a lot of time spent in taking a contractor over to a property if you want to do it i mean that's probably the best and most accurate way to determine what the labor and material cost is going to cost you to fix up and repair and remodel that property but when you're looking at a lot of deals it just takes a lot of time and it's so competitive right now that you really want to come up with a number that you're you're in the ballpark so let's say it's 50 60 000 once you flip a lot of properties and you get some experience you're going to be able to walk through a property and pretty much assess what it's going to cost you to rehab that property so let's say i walk to the property by myself or with a contractor and i determine this is going to cost me 60 000 for repairs all right so i put that number in here under repairs i already put in the purchase price of 475 and i'm going to figure out how long it's going to take me from when i own the property to when i sell it which is dd grantee to grant deed how long that's going to take me um right now i'm trying to get in and out of my properties in three to four months so under timeline you're gonna put in either three months here or 4 months and that changes everything and then we're going to go to the top and we're going to put in where it says projected resale price arv arv is after repaired value that's the selling price or the value of the property after you've made the repairs the improvements the remodeling so let's say that i've looked at my comparable sales i've gone out a half a mile i've looked at similar houses that are selling and i determine i think this property is going to sell for 650 000. so i'm going to put that in here next thing i'm going to do is now i am a licensed broker i can list some of my own properties and i'm going to save some money there even though i'm i'm a broker i'm going to put into my spreadsheet about two and a half percent to the buyer's agent or what's called the selling agent that's the person the licensed realtor that's representing the buyer so when i put on the mls i'm attracting other realtors other brokers who are working with their buyers and i'm going to be paying out a commission unless i get the buyer which is possible but i don't want to make that assumption so i'm going to put in about two and a half percent you can determine whether it's going to be what market you're in if it's two two and a quarter two and a half two and three quarters three percent or sometimes more depending on the market you're in so i'm going to use about two and a half percent to the listing agent uh buyers credits are usually credits that go to the buyer if depending on the type of loan or if they need credits to close in this market i'm not going to put that in because it's a very competitive market and most buyers are putting down a fairly large down payment and they're not asking for credits necessarily but um let's just leave that blank right now and then the dispos disposition selling expenses are your selling cost when you sell the property and you're gonna that's gonna be your escrow your title recording transfer fees notary fees all the costs that are associated not loan costs but all your like third-party cost and recording and those types of fees that you're going to pay as a seller even if you did for sale by owner or you're using a realtor you're still going to have these costs unless the buyer is paying for but normally you're going to as a seller you're going to have expenses like this so putting about one percent as a good number might be a little bit less but that's going to give you kind of a ballpark on what it's going to cost for title escrow recording fees notary fees etc documentary transfer tax fees so put in one percent at 6 500 on our selling price of 650. now the next thing is our listing commission if i'm selling my own property i'm not going to have any number in there but i'm going to assume that you aren't a realtor you're not a broker and so putting two and a half percent now you can if you find someone to do it cheap or some people do it some people meaning realtors or brokers will list your property for a lot less it could be one percent one and a half one and three quarters let's just use two and a half to have a nice number in here and that could change depending on who you use to sell your property whether you're a realtor a broker and you're selling your own property then obviously you'll take that out now you're going to have property taxes and this is going to be based on how long you own the property and in what county your property is located so you want to determine what your property tax is going to be for the period you've owned the property so i have my spreadsheet i also encourage you to get to learn how to use excel it's not difficult go on youtube take a few classes it's just nice to be able to work out some of the formulas in excel see the little formula at the top here that i created so it's based on how long i own my project goes for and and it calculates up here the actual approximate property tax liability i'm going to have so we put in our property taxes based on a percentage for the particular county the property is located in now the next field is going to be termite i'm going to put 1500 in there now it could be a lot more termitic termite and fumigation can get up to 10 000 or more but when i rehab my properties i normally take care of dry rot and wood in in those types of things i change the wood i do the actual um termite repairs that are called out in a termite report within my rehab so let's just put in 1500 which is you know in the in the general area of your fumigation if a termite company says you need to fumigate put a tent on it'll be in that ballpark 1500. so as you can see flipper it's going to cost you about 43 000 in cost to sell a 650 000 house it's important when you're analyzing your flips to know what these costs are because people call me you know quite often and say jay i'm buying this house for 475 000 or 500 000 i can sell it for 650 and i'm you know they think they're gonna make this huge windfall of money but they don't take the time i i'm surprised by how many people even experienced flippers that don't take the time to run numbers and they don't really know how much money they're going to make or lose on their flip now this model i'm showing you this spreadsheet this spreadsheet is with a private money loan if you're a flipper and you use cash then we can take out the private money and you're going to be making significantly more money you're at a definite tremendous advantage in this market or in any market if you have cash and you don't need to borrow private money private money is a great tool it allows you to leverage into these deals with very little money out of your pocket well let me restate that with relatively little money out of your pocket you can borrow a lot of the money from a private lender i'm a private lender and um and buy a property for 475 000 in this case with about a hundred and thirty hundred and forty thousand dollars out of your pocket now you can do it with less and depending on your experience because i lend a lot of first mortgages second private money loans and i've helped flippers buy a flip with relatively no money out of their pocket when they're buying and that's the experience i have at gw private capital so talk to me about your unique situation and i'll try to tailor some loans for you so you can leverage into your deal with very little money now but let's assume that you have for most right now for most experienced flippers you can borrow a first mortgage of about 80 to 90 percent of the purchase price so let's go with a loan amount of 85 percent of purchase and that means you're going to be putting 15 down so i'm putting in 15 which is going to be 71 250 based on a purchase price of 4.75 now my formula that's what's nice about excel is that if i change the down payment it'll calculate these figures and change my loan amount and everything so let's put in 15 down so you're going to be obtaining a private money loan of 85 percent of the purchase price 85 of 475 is 403 750. now um private money loans the rates are higher you're not going to be getting bank interest rates these are loans that are typically funded by private investors or mortgage pools or private funds and we're not so concerned with the property condition we can even lend money to people that have the best of credit so expect a higher rate expect rates in the high sevens into the high nines and even over ten percent for first mortgages if you're borrowing a second mortgage those rates are going to be higher anywhere from about 10 to 15 percent for second mortgages and most of these loans are structured with an interest-only payment required every month so if you're borrowing 403 thousand 750 the monthly interest only payment with a nine and a half percent interest rate is going to be 31 or 3196 that's the monthly payment so as a flipper that's using private money you need to figure out you need to have reserve set aside to be able to make that monthly interest payment it's possible that you might find a lender that's going to defer the interest payments but the majority of private lenders are going to require that you make a monthly interest payment um and then when you go to pay the loan off when you sell it then you'll pay what's called per diem or daily accrued interest so if you pay the loan off like in the middle of the month and you pay about 15 days worth of interest rather than a full month and escrow will help calculate what that per diem is and so so i have my repairs so oh now when you now in addition to the interest in borrowing private money you're also going to have loan origination costs meaning you're usually going to pay points on a private money loan it's going to be anywhere from about one to three points one point is one percent of the loan amount so one one percent of 475 is uh 4750 but anticipate paying about two to three points for the majority of private money lenders out there so i put three percent in here that's going to cover your points underwriting appraisal doc fee um all the other costs that go into borrowing the private money loans so it's not just the interest you pay but actually loan fees settlement charges that go that are charged to you and you need to pay those upfront you normally pay those when you when you close on the property so you need to have another twelve thousand dollars here for loan fees approximately it might be a little bit less might be a little bit more depending on who you're borrowing the money from so i put that in my spreadsheet now if you're borrowing a second mortgage i do have a line here and i'll put in the interest rate but let's assume that you're going to have the 15 to put down you're going to have the money for the repairs you're going to have the money um for the loan origination fees of um 12 000 and um and so that's what you're pretty much going to need to buy this property is the repairs the down payment and the closing costs so but our analysis is not just for the purchase now it's really looking down the road ahead when you sell the property when you sell the property for 650 we're trying to determine what's your pre-tax net profit going to be so you can determine if you even want to buy this property or you want to renegotiate the price so um assuming again we're selling it for 650 we're buying it for 4.75 we're putting 60 000 in repairs and we're gonna this property is going to be sold to another buyer in four months we or you rather buying this can have a pre-tax net profit of a little over 38 000 that's a good deal if you can actually find a property like this from a realtor or directly with a seller or an attorney or anywhere you can find a deal this i would buy this deal people always ask me jay what's the minimum return on investment you want from your flip and i don't necessarily like have a minimum roi or annual return now i also lend money to people and i'm getting usually like 12 to 14 on my money so usually if i'm not going to be achieving those types of returns from a flip then i'm just going to lend my money to people and i'm not even going to be in the flip game so um just i don't have a hard rigid number but i just compare my investment opportunities to to one another am i going to lend money am i going to go buy a flip am i going to you know do something else with my money so you don't you want to be in the flip game to make money and get really good returns because it does take a lot of time and it's not a passive investment where you're just you know you're you're putting it in the bank or you're you're just putting money there and you're getting a you know a a predetermined expected return this is a active investment you're going to be meeting with contractors you're going to be going to the properly on a regular basis this is an active investment that's also not only going to require your capital but also your time it's very time intensive and it needs to be monitored and managed you're not just going to put up your money unless you're the private investor and you're putting up this 403 000 that's going to be a little more passive because once you've made the loan to the investor the buyer then you just sit back and wait for your payments to come in and for them to fix up the house and sell it but you're the flipper you own this property and you need to get it fixed up and get it on the market and get it sold and there's a lot of steps between you buying it and you selling it so if i can make 38 000 on an investment and basically in this case you're putting up the down payment of 71 000 you're putting up the rehab you're paying for hazard insurance you're paying for utilities month for gas electric water let's say you've pulled permits and you've drawn plans you put that out of your pocket and also you've made four months of thirty one hundred dollar payments so that's twelve thousand seven eighty five so basically you're putting seventy one thousand sixty thousand twelve thousand twelve thousand to buy it um insurance uh maintenance hazard insurance utilities and then you're gonna that's the money out of the actual out of your pocket and you're gonna figure out if i can make thirty eight thousand dollars on that money i put on my pocket and then you figure out for how many months you've had it if it's only a four month project then your your annual return is going to be could be very very high so what i usually shoot for is depending on the purchase price of a deal i'm buying if i'm buying a 475 000 house and i'm not adding on to it i can get in and out of it in three to six months i'd probably be happy with like a 25 to 30 thousand dollar pre-tax net profit and the reason why you want to set that number probably at least 25 or 30 grand is because in life things happen what if your property doesn't sell for 650 what if it takes you longer than four months what if someone burns down your garage now you have to tender a title an insurance claim and it takes you another six months it takes you almost a year to build this then it adds you know another six months at thirty one hundred dollars thirty two hundred dollars now you're adding you know another you know eighteen thousand dollars you can see how the pre-tax net profit can really erode i've lost money flipping properties and it's not fun the best investment you can make is the one you just pass on you need to make quick decisions when you're going to buy a flip you want to decide are you going to buy it if not move on to the next deal and you don't want to waste a lot of time i see too many people investing so much of their time going to the city you know driving all the comps you want to be able to quickly if a realtor or a homeowner or someone gives you the opportunity to buy a property you want to be with literally like within a couple hours determine if you want the deal i would recommend just walk the property or drive by it determine the condition and what it's going to cost to rehab it so you want to anchor that you want to anchor the repairs cost then you want to find out how much do they want for the property they want 475 do they want 500 and then you want to figure out okay i think i can get in and out of this property in four months three months two months six months put that in and then look at some comps or ask the realtor ask your you know or like i said drive around look at some comps or just jump on the mls and you can within like 15 minutes get a good idea looking at you're comparing your property to other properties that are pending that have closed that are under contract i don't really look at active properties too much i mean it gives you some information but until those have sold or pending or under contract they're just properties on the market it'll give you a little bit idea of what you know they might sell for but some people overprice their properties and they're not really solid comps so you want to look at comparable sales i usually stay within like 10 15 of the square footage if i have a three bedroom house i'll look i try to look at other three bedroom houses if you're buying a two bedroom house do not compare your house to three bedroom house only look at other two bedroom houses there is a you're comparing apples to oranges comparing a two-bedroom to a three-bedroom house it's like comparing a two-door sports car to a four-door suv they're completely different so only look if you're buying a two bedroom only look at two bedroom comps if you're buying a three bedroom you can compare it to four bedrooms because they're a little closer obviously a four bedroom house is going to have more value than a three-bedroom house but you're going to be okay now square footage is very important are you buying a thousand square foot house you don't want to be looking at 2 000 square foot houses if you're buying up a thousand square foot house try to stay at maybe go up to maybe 1200 1300 square feet you can go a little bit larger to get more data but if you find other comps that are like another a thousand square foot house or 1100 1200 you want to be relatively close you want to be comparing apples to apples of your property also look at the lot size it has a little bit of bearing are you you want to compare your property to single-family homes if it is a single-family home and so you want to be able to establish your 650 value are the other comps are they fixed up are they in average condition that's great if you're if you're looking at other houses that aren't fixed up and they're selling for 650 then you're probably going to sell more than 650 if the other if all the comps you're looking at are you know fixed up turn key beautiful flips and they're at 650 or in the neighborhood then get comfortable with your number you want to rely on that you want to be nice to go over that number and based on the market we're in it's it's most likely possible if the market continues the way it is you'll sell for more than 650 that you want to get really comfortable with that number and don't let other people tell you what it's going to sell for i get deals brought to me all the time where i think it's going to sell for 6.50 and people are telling me it's going to hit 700 or just these pie in the sky numbers that are they're out there but they're like you know a mile away and they're like completely different properties so you want to be able to rely on your own information don't let anybody else tell you unless you you find realtors and partners and other people that you get to trust their values do your own homework do not rely on other people you can rely on a contractor that you've used and you trust to give you the repairs budget of 60 000 and also ask them how long is this going to take you you need that's very important especially when you're paying private money cost you want to get in and out of this deal as quickly as possible so i hope this spreadsheet has helped you i'll email you the spreadsheet call me or text me my phone number 714 four seven one nine one two and i'll email you the spreadsheet the reason i wanna teach you how to analyze deals with this spreadsheet is because i would love to partner with you i would love to buy a deal from you or i would love to lend you private money or be your partner so if you need help in any of those capacities selling me a deal partnering borrowing private money i am very experienced in this area so don't hesitate to give me a call and i'll send you my spreadsheet no costs at all i just want to educate you i want you to succeed as a flipper as a realtor working with sellers if you're a realtor and you need to fix up your your seller's house i can help them flip their own property i can put up the money bring in my um reliable contractors you be the hero realtor and help your seller put tens of thousands dollars more in their pocket by fixing up their property i have a lot of resources a lot of experience and i look forward to working with you in 2021 to make more money help you make more money and help you succeed as a flipper or a realtor or as a partner and if you want to make private lending a profit center for yourself and you have clients that want to borrow private money call me up and let's talk about that how you can make or offering private money loans to your customers a profit center anyways i hope you found this video helpful please give me your comments i'm subscribed to my channel give me a thumbs up like and i look forward to doing business with you thank you so much

Channel: GW Private Capital, Inc

Views: 728

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Id: 5tEr8721Zeo

Length: 28min 40sec (1720 seconds)

Published: Mon Dec 14 2020