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House Flip Analysis, the best mobile and desktop app available on the market for real estate investors today!

The purpose of this article is to help new real estate investors, users who bought my app, and the experienced to refresh on these terms and what my House Flip Analysis app is intended for. This was requested by one of our awesome users so thank you for the idea and keep them coming guys! One thing I love about software is the ability to use creativity to solve problems and also since the technology is so fast and readily available globally, changes can be made in hours.

Features that should be in every real estate investors toolbox:

  • 70% Rule
  • 65% Rule
  • 60% Rule
  • Fix and Flips
  • Fix and Flip Rehabs

What is the 70% Rule, 65% Rule, and 60% Rule?

The 70% Rule is used today and is well discussed among the real estate investing community. This technique is nothing more than a way to find the highest bid you as the investor should ever pay for a property. That is a property your looking to flip, wholesale, or maybe even turn into a rental unit. The reason behind this technique is to help try to have a safe guard for your investments with enough equity room to play with. One thing to remember is that while this technique can help calculate the numbers for you, there is no guarantee in buying and selling real estate. A lot of people lost more than their shirts back in the 2008 economy so this is why when we invest, only do it when the numbers make sense and your intuition is giving you the green light.

Before I show an example of how this can be used, let’s throw some definitions for these investment terms I’m about to list.

  • After Repair Value (ARV) – This is the value of the property AFTER you fix it up. Investors usually can buy cheap property by the pennies on the dollar because of how poor the property condition is. So the concept here is basically the value of the property after it’s been fixed up. For realtors and home sellers this is the comparables (comps) aka how much your house is worth.
  • Repair Estimates – When looking for properties to flip we are allowed to checkout the conditions so while we do walk throughs in potential properties we can jot down what needs to be fixed and get quotes from contractors in town to try to give as much accurate repair cost as you can.
  • Misc – This misc section covers all the nickels and dimes escrow adds to your transaction. Items such as closing costs of 3% if using any realtor(s), taxes, HOA, title company fee’s, etc… If you flip houses in California I hear they tax you for the air 🙂
  • Buffer – This is a safety blanket just in case homebuyers need help with down payment, unexpected property repairs, or pretty much for anything. There has been times when homebuyer won’t close on transaction unless something is fixed or upgraded for them on your expense. So don’t think that by having a 5% buffer percentage is greedy because after its all said and done investors could be out of pocket for the whole deal. Almost every real estate transaction does not go as planned. Prepare for the worse and hope for the best.
  • Wholesale Fee – The idea of wholesalers is someone puts a property under contract to sell that home for the homeowner. This individual takes the contract and tries to sell it to another investor for a fee. If the deal is good enough usually at least 30% margin then the wholesaler can make anywhere from couple hundred dollars to several thousand dollars. The wholesale fee is negotiable among the wholesaler and investor. Wholesalers are valuable because they do all the dirty work on drafting up contract with homeowners who want to sell their property and all investor has to do is close on the transaction with cash. If your the investor in this scenario make sure to do your due diligence by checking all facts, go over contract, walk the property, research the title to make sure its a clean title, etc…
  • Maximum Allowable Offer (MAO) – This is the number we care about, it tells us what our maximum bid amount is for this property. Never go above this number no matter how much ego you have, don’t do it! There is situations where you could of bidded more but there’s too much risk to take by not going by the 70% rule. Investors don’t let other investors overbid on properties!

So after going over those items I hope that helps you understand all the terms. Let’s checkout an example using the 70% Rule:

After Repair Value (ARV): $198,000
Repair Estimates: $15,000
Misc: $19,800 (10%)
Buffer: $9,900 (5%)
Wholesale Fee: $500

Maximum Allowable Offer (MAO): $93,400

The only difference from the 70% Rule, 65% Rule, and 60% Rule is the percentage value that is put in the whole calculation. Investors use different rates but the most common is using 70%.

70% Rule
(ARV x .70) – Repair Estimates – Misc – Buffer – Wholesale Fee = MAO.

65% Rule
(ARV x .65) – Repair Estimates – Misc – Buffer – Wholesale Fee = MAO.

60% Rule
(ARV x .60) – Repair Estimates – Misc – Buffer – Wholesale Fee = MAO.

The calculations are easy but when dealing with these numbers on a daily basis with several properties software like House Flip Analysis helps make life easier by calculating it for you and saving property addresses and all the numbers to lookup later.

Fix and Flips

This calculator focuses on the expenses of your fix and flip investment. It asks for you to input address, arv, repair estimates, misc, buffer, purchase price, cash needed, down payment, interest rate of loan, years of loan, monthly insurance, propter taxes, homeowners association (HOA), monthly electricity, water, and trash. After filing this out you will get a report on your total pre-tax profit of this fix and flip. If the number doesn’t make sense walk away from the deal. Its all about numbers in real estate so this calculator will help you know the costs. Also in this report shows all the details you inputted along with your monthly mortgage payment, and a profit forecast showing 3 different profit numbers based on time on market. So if you can’t sell this property for 90 days it’ll show you what the profit will be, then what it is in 180 days, to 270 days. These are valuable calculations to have when flipping properties.

Fix and Flip Rehabs

We save the best for last! This calculator focuses more on the rehab costs to find the profit margin $$$$. This was actually requested by one of our awesome app users.

It asks for property details and items around the property that needs repair work done, along with 5 empty text fields for custom item names and dollar amounts. Simple, concise, and straight to the point, show us the margin potential!

Conclusion

My goal of writing this article is to help identify certain terms used in the real estate world to those new and also a refresher for the experienced. I hope this was insightful and explained everything, if not comment below or send me an e-mail. Feel free to share and tell your investor friends about this app. Real estate isn’t only about investing with properties, its also about your friends too 🙂

Cheers to your success!

APA Tutorials Image

The purpose of this tutorial is to show you how to setup your APA™ format document using Word 2013. Whether you want to just download the template and go or if you want to follow step by step directions I got you covered! This can be done with any of the 3 methods covered below:

 

Method 1: Just download template pre-configured:

  1. Download APA™ format template (.docx)
  2. Open the document with Word 2013 and begin writing your essay.

 

Method 2: Use Word’s built in template:

  1. Open Word 2013

 Type “apa” into the search box. This will display a template that is provided by Microsoft for you to use freely.

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3. Click on the first template named “APA™ style report (6th edition)”.

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4. Make sure to File –> “Save As” to save the document to your computer.

5. Begin writing your essay. Most of the pages on this document are useless for most students so please consult your instructor what he/she requires of you. For example I was only required to use Title page, essay body, and references page. Others want an “Abstract” page. Know what is required ahead of time so you set yourself for success!

 

Method 3: Slow and inconvenient way.

1. Open Word 2013 to a blank document.

2. Type the essay title, your name, name of class, essay due date, and instructors name. 

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3. Select all text in your document with mouse or by pressing Ctrl+A. Now that the text is selected we need to set the proper font settings. Change the font to “Times New Roman” and the font size needs to be “12”.

4. With the text still selected, open the paragraph settings (see screenshot where to click).

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5. Set “After” to 0 and change the “Line Spacing” to Double. Click the “OK” button to close the dialog.

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6. Now that we have the proper settings configured let’s make sure the rest of the document uses these settings for the whole document. While text is still selected, right click the Normal style and choose “Update Normal to Match Selection”.

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7. Center your text!

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8. Position the text cursor (blinking bar) before the beginning of the essay title. Press “Enter” 9 times to position the text center page. Be sure to re-adjust for team essay papers because a group of student names can take a few lines. Just make your best judgment on centering the text vertically.

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9. The title page is now complete! Let’s work on the rest of the document. To add a second page click at the end of your instructors name. Click on “INSERT” –> “Page Break” or Ctrl+Enter.

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10. On the first line of page 2 type “Abstract” and center text.

11. Set the second line text to left-align. Begin writing. The abstract summarizes the problem, participants, hypotheses, methods used, results, and conclusions. Not all instructors require this page.

12. When your finished, click on “INSERT” –> Page Break or Ctrl+Enter to create page 3.

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13. On the first line of page 3 type in your essay title and center it.

14. Set the second line text to left-align and press Tab (from your keyboard) to indent your first paragraph of your essay. Begin writing your essay.

15. When your finished, click on “INSERT” –> Page Break or Ctrl+Enter to create page 4.

16. On the first line of page 4 type in “References” and have it centered.

17. Set the second line text to left-align and paste your references here. Be sure to italicize the title of your sources, and alphabetize your reference list. Also left-align the first line of your reference. If the reference goes onto 2 or more lines make sure to indent them. See screenshot for example.

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18. The final step we need in our APA™ format document is a header. Scroll to the top of your document (page 1). Double click anywhere on the top of page. This will open the header. Check the “Different First Page” box (shown in picture).

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19. To insert the page number click on the “Page Number” button located top left of screen. This will show popup menu, click “Top of Page” –> “Plain Number 1”.

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20. Type “Running head:” followed by the name of your essay in all capitalize letters. See screenshot for reference.

21. To move the number to the right side, hit Tab twice.

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22. Scroll down until you see header for page 2. Insert the page number using same method in step 18. Type your essay title in all capitalize letters and hit Tab twice to position number to the right.

23. Exit out of header mode by double clicking body of page. We are now done setting up the APA™ format document! Now go back to page 3 and finish writing your essay.

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American Psychological Association (APA), are registered trademarks of the American Psychological Association.
APA Tutorials Image

The purpose of this tutorial is to illustrate how to add APA™ format references to your existing document.

 

  1. After generating your reference using Citation Generator, copy the text and paste it into your document on the last page/reference page.
  2. Make sure the first line of your reference text is left-align. If it leads to more than 1 line, simply indent each line below the first line.
  3. Italicize the title of your source. e.g. book titles, name of articles, etc…
  4. If you have a list of references, be sure to alphabetize it.
  5. Note: When copying and pasting text to and from your Word document the font and font size changes. Be sure to double check the newly copied reference text is set as “Times New Roman” font with “12” font size.

 

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American Psychological Association (APA), are registered trademarks of the American Psychological Association.