Soldier to Soldier Hawaii

Due Diligence for Real Estate Investors – How to Use the Flip Analysis Spreadsheet

Aloha gang! Michael Mazzella here
hope you're having a great day! I want to introduce this video to you.
This video is going to show you how to use my Flip Analysis Spreadsheet. Now unlike the
Deal Analysis Spreadsheet which works for any
type of deal, the Flip Analysis Spreadsheet is
something that I developed just for my company use. This was an
internal use document that I use and my employees use for
flips so this is good only for the house
flip strategy for a Buy-To-Sell. Now that said, it's very easy to use. It's
fast and its dead-on accurate, so this is what we use and when it's the
predominant strategy like it is on Oahu right now whent Buy-Fix-Sells
cells are the strategy that we're doing we use the Flip Analysis Spreadsheet so I hope you enjoy the video and this is
for you. So here is the Flip Analysis Spreadsheet. If you follow my
mouse you'll should check the version number up

You should have at least version 5.0. It is late July of 2014 and I just
released version 5.0 You should be using at least that one, the Flip Analysis Spreadsheet and I just want to give
you a quick overview. I got it really small here so you can see most of the whole sheet. We've
got a heading section up here. Notes section I'll throw a photo of the property in
and then we got some major sections here. So this
section is the purchase price with all of the associated closing costs. In the second section we're gonna
put our inputs, which will be our fix-up cost. These are our renovation costs in this area and then these down here are the holding costs and, you know, the monthly holding costs.
What is it cost us to hold on his property for a month, mostly the
utilities and then times the number of months that we expect to hold the property. And then end down here is our Resale. Now we're gonna enter the market.

We're done, we've renovated the property. So here is
our After Repair Value: our ARV. This is the resale price that we're
going for and then the associated costs when we exit.
So these are closing costs. It includes realtor commissions and different
closing costs at the exit. We're exiting obviously at
a higher price so our closing costs are gonna be a
little higher; and then down here this will be the net proceeds we get from the
sale then we subtract out if we have any interest due if we did any
seller financing or if we've got a lender we're gonna subtract out what we pay the lender leaving a balance and that's what we we would get. This is our profits and then we have
an ROI down at the very bottom. Okay, so that's how the sheet is laid
out. Now let's go ahead and take a closer look at this.

We'll go to 150. There we go. Now let's see what 200 looks like. Two hundred! Look how nice that is! Okay so here's how I fill the sheet out. I'm
gonna start up here with property info up with the
address at the property are so good number of bedrooms and
bathrooms and men's where for the gym living space a loss a
Blu ray here the estimated all the time and again check your version my me she
got the latest software note that going down the spreadsheet we
had two columns so you can run in two different
scenarios so this is my a scenario meaning that this is the 1 I'm trying it now miss
winey get his most accurate I information that I can't and
then that leaves me another column if I want to do run and alternate scenario when it by
paying a little bit more when it stays on the market a little bit
longer alright by don't sell at that price I
was hoping when it sells a little bit lower so then I can run an alternate scenarios
in somewhat if centenarians in this second power
okay when we gonna focus on a horse a meanie
column alright and then over here this is the
notes section so this okay to help me does get up to
speed quickly on this deal compared to on the other deals I'm working on and
they have quite a few these different spreadsheets at any one
time so I don't want to forget this information
that includes I have somebody found the deal if I had
a wholesaler bird other realtor I'm here is the initial asking price this'll be my offer on any
terms said I negotiated with the seller and by hand one lender in place or two
measures in place are sometimes I'll find a deal myself or
out on part of the deal so I mean and the lender information
there too and then I'll also throw in a picture of
the property I'm usually a curb appeal picture just
for a quick reference so I can a mentally associate as I pull up a spreadsheet which
property it is and I'm working on K now so we're going to start with the
first section year this is on the purchase price and also costs associated with on you know our
our initial closing costs when we purchase so I'm gonna plug in a price right here
this is what I want to pay are in this will be my offer price and I
kid like I said we've got a couple a different column so you can run some
different scenarios up to see what which one is going to
work in that dream now I'm gonna show you are really fast
way to come up with it your closing costs test to make closing costs when we're
buying the property and then later on when we exit from the
deal and sell the property here's how I do it really fast and
dead-on accurate boobies now I am on my web browser and I jump
over to know why who are he which is our mean an old
reliable and less and search website so I'm going to mind price my purchase price is going to
be 340 in a minute select a region will select
Metro that scene 10 honing my cutie so my by price is 340 I miss it the nice 300 maximum price 400 just the narrow down the screen and
the last one liners here so what i'm looking for now he is this column is the original price
what i'm looking for now is the current price an ominous scroll down and look for
something that recently sold homes where is now
being listed right at my knee in the same price and
I'm buying and so I am buying at 3:40 and it looks like
here we go we've got something right at 3:40 in Case No we gonna go ahead and shoes when these will choose this one me you its and let's go and scroll down what i'm
looking for years means its maps right here now i'm looking for
in the closing costs here they know the series says estimated closing costs:
for buyer right here so what I'm gonna look for
our the last title insurance amina I'm gonna pull out and extrapolate right from this is similarly priced on
unit that just sold the same price as mine and these are the
closing costs are many use these in my closing costs and you're going to be
very accurate so what i'll do is i'll transpose these
numbers overeat onto my spreadsheet in case and
now when I am done is I at and take in all at the II field in my knee closing costs so I
took these costs readout property a different property that's
alright at 3:40 and I just you know one little thing to
keep in mind is that if I'm using a condom as an example but
my property is not a kind of been there are
certain things that won't apply like homeowners easier maybe their
lender ease that I know that you are not modified any so basically
when you're extrapolating a closing costs from a different
property it's only the same price to see not put
in when what does apply the now we nailed it pretty accurately
so now we're done with this and then down you read that this is our
total purchase price including oliver closing costs seeking
and we're pretty confident that is accurate so that's why a awesome film in
the alternate column that is really not going to
change because my are closing costs are going to be pretty face UK to now move down to the next column next section which is are picks up costs
and it'll be the next thing that comes in the process so our picks up costs couple ways that
we can do this we go over this in more detail in the
nature course and also my a the video the training
video that I made for you on renovating a property but to essentially what we've done here
is I I got competitive bids from a couple might a general contractors on
this and I went with the higher one and I got a
bid that is lower than this but I went with the higher one because for planning purposes I always want to
use the more conservative number so I'm using a budget I said the
budget and 160 160 thousand on you don't you can either do it that
way instead a budget for you can get a detailed breakout from
your contractors and then allow the total to be and you
know to be tallied up in the sub total today I went with the
budget are all in this all these line items are
going to need me in that and within that budget K and he write a note to myself to see
the renovation plan which showed you from my contractor
based on this long but worth it and they now my contractor and that is how you write 167 this part is actually not difficulty
of weekend against major you get
competitive bids from more than one easy from tumor read my mind contract
and on a bigger just like this when we gonna spend that much money 160 on make sure the issue you are using a
general a general contractor so that they can
get all the permits and also make sure that it's going to be done correct days and you know we can't jump
down soon next section which he is our monthly
Alden costs so let you take a look at this section
nissen these are some other costs that we are we expect to incur during that time that we're holding the property from the time
that you close while we do in the renovation when it's up on the market and then
while its backing and small meeting for our choir and to sell we're gonna be
you making he needs to be Tricity water sewer and
maybe some other thing so you're gonna make in estimate
on what those are name of supply and find the number of
months that need specter to home then so be conservative usually
whenever I being here out I am going to at one had
at least one action month them run you want action on to it son and down
here don't tell us our total holding pass and some here you're just taking
your best estimate I love you know ensuring and senior you different
different utilities and any other in a week current monthly recurring
oxygen cannot be a wonderful we now to see this in a few different
places throughout wherever you see he's little too renting marks on that means if there is any a
little call outbox that will have different I notes on here for instance in you know in this
particular cell and we can use it since cost to borrow
cash monthly interest uses only the lender requires monthly
payments if not and we're gonna you jump down a new the
bottom and more people enter at the end so just wherever you see that he needs
to do some kind you know explanation okay so now I think
that effectively covers this section on monthly holding costs gates and now we can move
down monthly holy costing go into the next
section this is our an anticipated retail resale price in
this is our are also known as our after repair value so the number here and that you give you
a ride that and here you see I have seven EE I run
an alternate if we don't get the price it needs back on you're going to this is based on
a thorough evaluation up compare ables you looked at him parable sales by the
time you'd like this in actually this is one of the most important
numbers that you going to plug into the entire spreadsheet this is one in your most
important inputs and you know we value we calms you can
narrow it down said calms add to the ones that most closely
match your subject property undermines you know how your property is going to
look after we finish them animations 0 and on what you need to make sure
we're only working with a hand on the the very best in parables and
when we go out to look at our property when we go out and do this site to our at that point we're also going to drive
by the cops raskin tried binding air standout now
and in our class that is very very important that is how we arrived at this number
rate here on you can apply to that number and that number and and men let's stop about you are and the sales person these
are going to be are closing costs now when we exit from
the property notices at a very higher price now we're
at at seven anywhere inside bought this particular
property niña a hiatus from 340 and then within 160 renovations and
Pauline round 500 he said there is a big difference when
we're exiting and now because we're selling we have two a realtor commissions so on around just pay a hole on six percent repins more savvy investors we never
paid that much to have our property sold by realtors so
what I'm doing here as you can see from this call outbox is I am of Ernie Natsu point two and a half percent commission
and buyer's agent lesson 3500 out flat he listening to you
aren't one of our Realtors and if you click on this cell you'll also see up here this is my
formula so you can see the formula okay you know 90 91 Mb where you've got these
little red takes minute call out boxes now word where do
we get these costs from where isn't very accurate way on as you need to get our closing costs
well once again we going to do what I can do earlier and we're going soon jump on the MLS for
gonna look for a property just sold range around 700 in eighty thousand so here we go community I went
to my Reem do way search jump in and do it instance search all
reasons I'm unit jump over City thats marion is and designed yes down into the market it's
seventy so let's set the name rice 79 max race me on this evening at ten Property
Centre in net areas so we gonna look for something Matt is as close as we can get to send
any either we have one it's exactly names name race and best con thats the name its this thing and I'm gonna scroll down news room and you yeah Manuel unique yet Union on us here we are now we re this time is
gonna be estimated closing costs: read this seller okay said in a minute same these numbers
you know our commission is going to be a little bit different right we're not paying for and a half
percent when we pay actually is explained he comes out to be about to
read three and a half percent and came but we have our formula for that so we
can more than that but the escrow past final insurance in
main stacks earn a you know all this stuff will go ahead
and plug this into our spreadsheet showcasing now we have completed this
section with are and are after repair value: we've entered in our realtor auster
modified mentor on us and we me found on a private property yes all right
around rain at 780 and we right or print those those closing costs
easily pretty accurate now with this blog also so that pretty
much Kansas to me and your when the property
sells this is going to be the net proceeds it
comes to seller and being here weakness in you may have
a couple of others attractions to me so missus if you're
paying a you set up some sort of seller
financed in this case a not and in this plot down
here is important because I do have lenders
on using private money now done something unwanted so the person's going to get interests
right be4 before we get paid we have to pay them
their principal back in an awesome their interests so I
want to show you something over here on the site notice in column GE all the way down the spreadsheet you see
this number here with what it's doing is running your I'm running totals the
total cash in the deal that's required to do to be
be innocent total at fired and its kind in saudi to Rangers
even see we've even total cash needed it's off to the side
this is the cash needs and deal and then here will write in the
amount borrowed how much we actually can borrow and is obvious in
the rest would be are our own cash in this case in this
particular case I borrowed 300,000 for 10 lenders K and so in this news the interest and now so if I'm pained by a lender 12 percent and up here it shows the number of
months we expect a rainy some 12 percent 300,000 is going to be
three thousand among times nine months and so where I did than 27,000 I was
broke out my calculator in and that is the interest and
entertainer when the property sells you see me in cells in nine months K now
when it's this number well as 500,000 wrestling and Barnum partially holiday the numbers year in a
row peace 500,000 the net which is about all
the cash it meanie so then it's going to be 5,000 per month
times nine rainy and nine months and then was the main lender is the unit 45,000 me minute changes and bottoms and what's
left MVP of and dinner is going to be are profit on
the properties and is this particular deal is gonna net I S 297,000 machine is 30 percent now keep in mind 38 percent is based on
the total cash we need it and and in the profit that we need insulin this is 38 percent is our our online
free big deal self again annualized it then we we turn
in nine months since you into twelve months so we would add
another 25 percent say that so we're probably looking at it now on
close to fifty percent nom rori if we annualized net yes home soon you're pretty sweet pretty
be I have arrived in my conclusion I'm in 1897 thousand dollars on the
steel now 18 don't like more on your results
when you run your own TL you have a few things you can go back
and do and see you gonna happen lower your offer price okay and you might be able
to see if you can tweak and yes on and your animation you not
immediately do all the renovations Inc %um bought me
meet some friends get away with doing less Justinian minimal renovation K and that is really a it's really comes down to news to paint
it just means it in most cases you need lower your offer
price until numbered down here it makes sense whence the gotta be able to back out all at your
cost no matter what he said the only other thing you could really change on you going to
send you to make some tweaks here and information pops year but not a whole lot in and
everything else is gonna focus on this purchase rights and gay so no on there
you know in this theater pretty helpful and helpful spreadsheet and then the
very last thing I'm going to do isn't gonna see my spreadsheet new seed as in and we'll and I go ahead and make
when I do is i'd like to see my name ans unity and in the address the adherence to return on the property
and I will go ahead he'd go ahead seen its that way home makes a mean and that's it and then when I open up the
neck she to do a new 1 I'll say didn't see the new name up the property a the new property then
analyzing K one last thing i buy one last thing at night since you know
you and that's all the way down at the bottom on you she we jump on notice that the
recent ads down here okay and then I set up in a
that uses over the years and they're pretty helpful and is clicked on the expense instead
and this is a way for us to keep track and everything that we on at least there ongoing in even if you have a partner on
who spends lots so you can just keep track everything in
any keeps a tally you know down at the bottom and that's
very helpful so when I do is equities in it into in Dropbox were
both the bus can access it intended to bury ended BDL we have our
accountants and access the drop box and then we'll go
over everything can't make sure everything is smooth and
then there is another 10-year is a time line 10 and Here I am just and issues is the key transit on the
times time from the time I find the property
make an offer in its at the no in Esmil you know all
the way through getting everything set up use up more
legible chess in here all the typical things that may
or may not happen unity so many things maybe not out at
the mall but most of them are easy with this particular property is it
actually different property on the next train
mein that year the properties listed at it on
the MLS the next thing that'll happen is we'll
democracy commitments that and then we got back in the ass no
Brussels day and yes it s what I wanted to show you
is a couple other tabs on your team the lender summary in when you complete your Thompson news no and are New Year on Ian on this task is losing
lenders summary and also and so when you get here is your gonna run announces a new deal in then presents the a summary to maim inspected manner that's what this is
more you don't need to overload them with all at the numbers
that you're looking at this just an AC shortens Lee you can cut
and paste this in Unisan email over to them I'm just just in this particular case
against any basic things that they need to know without getting them lost in all the
numbers that you were doing car so i hope u he joins this training baby I hope it
was helpful for you and I'm no good good luck in your
endeavors as a savvy real estate investor and if I can help you i'm happy to do
that give me a call or if there's any questions about the opry hey I should be game now go out we need an awesome day yeah yeah I