Quick Turn numbers

Since we are on the subject of quick turns, or "flipping" a house.  Let's talk about the numbers analysis.  When you approach a property and hope to make money, you need to make sure that you BACK into the deal.  Do not buy the property, try to fix it up and then hope for the best.  That's a surefire way to end up broke, in foreclosure and facing a substantial financial loss.  So what do we mean by backing into a deal?

1.  Know what the property is worth if it was in pristine condition.

2.  Subtract 10% off of that price.

3.  Take your new number and subtract your profit (which should be non-negotiable).  In our case, we require a minimum 30% profit before we will purchase.

4.  Get a good estimate on repairs.  Subtract that from #2.

5.  Subtract out your realtor fees.  Even if you plan to sell the property without a realtor, ALWAYS include the commission, typically 6%.  We HIGHLY recommend you use a realtor on any proprerty you SELL.  Buying?  Not necessarily.  (Different discussion for a later time)

6.  Subtract out the cost of your money.  In other words, you need to figure out how much interest and the amount of fees you are being charged for the money you are borrowing.

All of these together will equal your offering price.  NEVER, EVER go over your offering price.  This is set in stone.  There are many courses on how to do this and be profitable.  We strongly recommend that you contact several, and take a few classes.  We did, and it changed our lives.

- The Cave Buyers.