Jeff Brogan

Owner/Operator/CEO

Located Near Canton/Akron Ohio

Case Study Example  - Personal Flip of the Property

This Case Study Example comes by the way of Pittsburgh, Pennsylvania.  Even though I want properties in Ohio, this Pittsburgh Property was my first baby.  I'm going to go through the numbers to give you guys are great example of how the process works.  On our "How It Works" page, you saw the No Obligation Cash Offer Formula and what terms and numbers complete the process.  So Let's Give it a GO!

In This Case Study, The Cash Offer Formula Goes Like This:

ARV (After Repair Value) - Rehab Cost - Selling Costs - Profit = Your Offer

Identifying the ARV:

The first thing you will want to do is figure out the ARV of the property.  This value comes from properties that have sold recently in the surrounding area.  This is probably the hardest thing to figure out when it comes to establishing a Fair Offer for all of those involved.  Where would one start when figuring out how much a home is worth?  I always start with the square footage of the subject property.  I try to compare that to the square footage in the sold properties in the area.  Then i'll compare the year the property was built, number of bathrooms and bedrooms and anything else that could possibly be similar.  This gives a pretty good starting point on what the ARV could be.  The final factor is to figure out a price per square foot once you take everything else into account.  In our case study example, the ARV is set at $180,000.00.

Figuring out the Rehab Cost:

This option really depends on the shape of the seller's property.  We figure that every home would have to be updated at some type of cost in order to get it ready to list.  New buyers are reluctant to purchase a house that doesn't have some reasonable updates inside of it.  Some of the homes conditions that should be accounted for are the roof (could be in the neighborhood of $10k), furnace (5k), and water heater (1.5k).  You also may have to update your kitchen (5% of home value) and bathrooms (10K).  As you can see, getting things ready to sell add up very quickly.  In our case study example, the rehab came out to be $33,000.00.

Calculating Selling Costs:

This is a pretty easy calculation once you get the ARV down pat.  Normally this falls right around 10% of the ARV.  We get this amount from what the realtor costs would be and then add in what the closing costs would be.  Realtor costs do vary based on the Brokerage and Agents that you use but most of the time they fall right around 6%.  The Closing costs would then make up the remaining 4% of these percentage.  When selling a house for a cash offer, these costs are then negated.  We pick up the closing costs associated with the property and the Realtor costs are skipped.

Profit:

We are in business to make a profit, so this has to factor in.  The amount can change based on different circumstances.  One Example would be on how easy the disposition of the property is, which means the end goal of the property.  This is based on what we talked about up above.  Are we going to flip it ourself? Are we going to sell it to one of our investors that wants to flip it?  Are we going to turn around and sell it as-is to a buyer?  We decided on this Case Study Property that we are going to flip it ourself.  The Profit for this would need to be about $20,000.00 for us to do the deal. To be clear, if we are putting 33k into the rehab, we like to try to profit 20k in the deal. 

Our Case Study Figures:

$180,000.00 - $33,000.00 - $18,000.00 - $20,000.00 = $109,000.00

Your Cash Offer from us would be $109,000.00 if you owned this property