Learn from a Former General Contractor and 38 year member of the Real Estate Industry, how to help property owners get more money for their homes! Ed Laine covers ROI, Scope of Work and everything in between. Let me know what you think!
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Transcript:
all right I am going to do just a quick
overview of a flip analyzer that I
use and this will help you determine
Roi so uh and I can send you this uh as
well but basically what you’re going to
do is you’re going to fill in the
subject property and then the finished
arv comps right
so this is Comm number one that was
rehabbed and it’s sold for X right and
this is going to help you kind of work
through and determine what you think the
arv should be uh if you do the work that
you’re
considering so it’s all built in the
formulas all work and it’s pretty easy
uh it also allows you to factor in
interest costs if you’re going to use a
hard money loan or if you’re going to
use a better loan or whatever right um
and then it pours down through and spits
out uh what your estimated profit will
be and what your Roi will
be now
this part pulls for the repair cost from
this second
Tab and this is one of the most
comprehensive lists of work that could
be done
that you probably will come across the
key for anyone using this is make sure
these
numbers uh Jive for your market right
because these are all numbers that I’ve
used for Seattle and I update them as I
go you know as Lumber values went up
400% in the last five years and blah
blah blah
so uh you want to make sure that this
works for you and your Market the other
place you could
use uh is a website called Blu
hammer.com
and blue Hammer I have an account with
them I haven’t logged into my password
protector that this
morning come
on right so what this will do and the
beauty is it’ll do it by ZIP code so you
could put your uh scope of work into
this and it’ll tell you what they cost
in your ZIP code so if you don’t have a
contractor that’s a friend of yours to
do this for you you can use blue Hammer
to do that but that’s how this works and
the other thing I’ll show you is uh
have it save so bear with
me this is the one pager I was talking
about right so you can figure out an Roi
you could even put um Ro over here would
be equal
to the money
invested divided
by difference between what it would have
sold
for
and what it sold
for what it would is sold for as is
and what It ultimately sold for because
you did the
rehab that’s the
ROI and thank you for asking this
question because I didn’t have that on
my form and now I do so uh that’s how
you calculate Roi right it’s if I spend
200,000 how much more am I going to make
it when it
sells out of after paying back to
200,000 what’s the ROI the return on the
invested dollar so that’s that’s how it
works it’s pretty straightforward math
the reason I made the comment I made
about um sometimes people don’t know
what Roi is or how it’s calculated it’s
because they don’t so you want to just
have a pretty good handle on it you know
if we’re aiming for 40% that means if we
spend 10 grand it sells for 14
more that means I paid back the 10 and I
kept four grand that’s 40% of 10 grand
if I put 100,000 into a house it’ better
sell for 140
more right so I actually had an argument
with one lady she was doing the math
wrong she actually wasn’t her she didn’t
know the math and a friend of hers said
oh no he’s that’s not 40% and I was like
you guys are way overthinking this so
it’s better to have that conversation
face to face right because if a consumer
is believing one thing and they’re just
wrong
you’re not going to be able to convince
some of that over the phone or over
email or text right so anyway hope this
helps uh if you have any other questions
let me know and feel free to join us on
agent power huddle 8 am on Fridays if
you have questions and you’d like to ask
them directly I am there every Friday
all right take care