REI ETUTOR

Fix and Flip

Fix and Flip

REI eTutor

Fix and Flip InvestingBuy

Renovate

Sell

Fix and Flip

REI eTutor

Know Your Fix and Flip Plan

How to fund your purchase

Where to locate properties

Your exit strategy

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Building a TeamBuying realtor

Assists in finding properties, making offers, etc.Contractor

We recommend to always use a licensed contractorAttorney/Title AgencySelling realtor

Discount realtor service

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How to Purchase

Banks usually do not lend on “Fair Condition” propertiesYour own cashSoft money

Private individual – not in the business of making loans. Family member, friend, acquaintance.

Hard money Funded by a private individual or corporation. Short term loans at higher than market interest rates.

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How to PurchaseHard Money

Typical Lending 55% t0 60% ARV What is ARV?

As –Repaired Value Example:

As-Repaired Value: $160,000 Typical Lending: $88,000 to $96,000

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How To Purchase

Analyzing a DealFactors to Consider

As-Repaired Value Buyer Closing Costs Holding Costs Repair Costs Permit Costs PROFIT Selling Costs List Price Your Offer

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Analyze a DealWork backwards from as-repaired valueBe realistic on your holding, repair, and permit

costs Being too conservative or optimistic can hurt you

Don’t be greedy Average profit is $10,000 to $15,000

Your offer may or may not be influenced by the list price

Always consider financing and cash on hand in your offer

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ExampleProperty has an as-repaired value of

$125,000Repair costs are estimated at $8,000Permit costs are estimated at $500Profit expectation is $15,000Buyer closing costs: $3,000

Working backwards we are at $98,500.What’s left?

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Example continued

Estimate hard money financingARV $125,000

55%: $68,750 60%: $75,000

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Example continuedHolding Costs

Monthly interest only payments Insurance Water/Electric

If expected holding time is 4 months then Payments: 3 months interest 4 months insurance Water/Electric 4 months

Keep In Mind Turn on fees for utilities Some insurance companies require payment in full

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Example continuedHolding costs estimated to be $3,200Selling costs:

3% commission: $3,750 Listing fee: $250

Goal Purchase Amount: $91,300 or lessDifference between goal purchase and

financing $91,300 - $75,000 = $16,300

Cash needed for this deal $16,300 + $14,950 = $31,250

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Where to Locate PropertiesRealtors

Reasonable selection as many banks do not financeClassified Ads

Handyman special, repairs needed, investment property, rental, etc.

See our Motivated Sellers Module for more information on locating properties.

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How to SellList with a Realtor!

Retail buyers trust realtors more than online classifieds

Find a discount office where you pay listing fee and 3% seller commission Can’t find one? Go to your local REI club’s meeting

Craigslist, Backpage, etc.Facebook/Social Media

Conclusion

REI eTutor

REMEMBEREvery Offer Does Not Result In A Deal But

Every Deal Is The Result Of An Offer