What investor doesn’t want an easier way to streamline their house flipping efforts? If only there was a clear cut, and easy to use spreadsheet that makes it easier to invest!
Thankfully there is! You can get our free home rehab valuator when you apply for a hard money loan! When using this spreadsheet it is important to know the key factors for your flips. We walk through your must-haves to smarter investing with a house flipping spreadsheet.
ARV is the most important calculation for fix-and-flip investors.
Private money lenders use the after repair value to calculate profit and future value for the long-term properties.
The following information is important when determining a property’s current value:
- Location (neighborhood, accessibility, proximity to amenities, etc)
- Lot (size, corner or interior, shape, slope, terrain, roads available, etc)
- Structure (size, number of stories, type, style, etc)
ARV is essential to know how much you can earn from a real estate investment.
To calculate the ARV of a property, the following you can apply the following formula.
The property’s purchase price is $100k. The repair cost is $25k, and you expect to sell it for $150,000, the value of repairs is $50k but the cost of repairs is only $25k. This results in an ARV of $150k and a potential profit of $25k.
ARV, or after repair value is important because it determines a project’s sale price, renovation budget, and overall profits for the flippers. It is also used investors looking to determine the value of a rental property after renovations to estimate rent and/or the future value of the long-term property.
After Repair Value = Property Purchase Price + Value of Repairs.
How To Use Your House Flipping Spreadsheet To Calculate Your ROI
ROI or ‘Return On Investment’ means the percentage of invested money that’s recouped after the deduction of associated costs. In Real estate terms, the amount of money gained from an investment.
A basic ROI formula looks like this. ROI=(Gain−Cost)/Cost
The Cost Method
This is the preferred method for properties bought in cash, rental properties, and those more interested in the cash flow and not equity. How to calculate ROI using this method?
The costs in this method include all the expenses related to repairs, renovations, and purchases. With this method, any of the expenses involved in renovating and repairing the property are added.
How To Calculate ROI: Out-of-Pocket Method
Many investors use Phoenix hard money loans, and other loans to finance their investment. This changes how to calculate ROI for your real estate investment.
Real estate investors can sometimes make more for their investment because they did not pay in cash. When using this method, investors change how to calculate ROI for their investments.
The following ROI formula is used for these investors.
ROI= Annual Cash Flow / Total investment cash
This a great method for rental investors, as the annual cash flow can be used to negate the cost of operation.
This differs from the cost method as it only accumulates the cash flow, to the total cost.
Using Your House Flipping Spreadsheet To Estimate Your Repairs
Underestimating the cost of your repairs can cost you. This will eat your bottom line and cut into your overall profit margins and make it harder for you to profit from your flip.
Correctly estimating your repairs will help you determine your profit margins, ARV, and ROI. It is also difficult to properly estimate your repairs!
Labor costs, supplies, and materials are going to be the 3 most important things you track for your repair costs.
Follow the steps below to get an estimate for your repair costs:
- First, compile the total list of materials needed, and record a high and low price estimate for each. Once that’s done, add both columns of numbers to get the total cost for both high and low.
- Then add the two totals, and then divide by two to get the average cost.
- Using this average cost you can compare to national and local averages. This is a great way to determine your repair costs!
Private money lenders in Arizona know that to learn about labor costs, you should talk with other investors and real estate professionals to learn which contractors they use and like. Network with these local service providers to find out what their usual charges are, and team up with those who can do a dependable, quality job at the lowest possible cost to you.
How To Find Financing For Your Flip
For those looking to invest in real estate, hard money loans are the best options for new and seasoned investors. These asset-based loans make it easy for investors to get the fast funds they need for their investments. The hard money loan is tied to the after repair value of a property, and can be approved in as little as 2 days!
Finding the best hard money loans loan is easy, finding the fastest lender can be tricky with so many options.
To find the best lenders you should look for the following:
- Rates and Terms
- Turnaround Times
- Arizona Hard Money Lender Reviews
- Customer Service
You should always see what the terms and rates will be for your hard money loans as it determines your payment methods. Hard Money lenders should also provide short turnaround times as well! Look for customer reviews to see what others’ experiences working with this lender. Reviews can also give insight into the customer service to a company and how they help you get your hard money loans.
Prime Plus Mortgages, the fastest private money lender in Arizona makes it easy for real estate investors to get what they need for investments on their timelines.
Using a house flipping spreadsheet is a great way to start smarter investments.
When using a house flipping spreadsheet, make sure you know how to properly calculate and track for the following:
- Using Your House Flipping Spreadsheet To Calculate Your ARV
- How To Use Your House Flipping Spreadsheet To Calculate Your ROI
- Using Your House Flipping Spreadsheet To Estimate Your Repairs
- How To Find Financing Your Flip
What is one thing you always track when investing?