Others prefer the buy and hold model or the BRRRR

The 6 Most Important Calculations When Assessing a Fix Flip

Is that really how flipping goes?

Not all investors agree that flipping is the best process for investing in a house. Others prefer the buy and hold model or the BRRRR strategy. The “right” choice will depend on the home’s value, how much you can afford in holding costs, and what repairs are necessary to flip the property.

No investor should flip a house without looking closely at the associated costs. The estimated total will always seem lower if you forget to factor in the little expenses that slowly eat away at your profit. Don’t leave any costs up to chance.

The six most important calculations you will need when assessing a flip include:

Current cost of the home

ARV (after repair value)

Projected repair costs

Other monthly expenses

How Much Does It Cost to Flip a House?

Dive deep into the aforementioned six areas to calculate as accurate an estimate as possible. That way, you can invest confidently in properties where the numbers make sense.

Surprise repairs or sitting on the market could mean the difference between a good investment and a bad one. Prepare yourself appropriately to walk away from your flip with a stuffed wallet.

1. Current Cost of the Home

## ## This is obvious. How much are you going to have to pay up front in order to get this flip started? Know that this cost will also have an impact on other calculations, like closing costs and financing costs.

2. ARV (After Repair Value)

The ARV will determine whether or not all of your repairs are worth the time and money. Investors calculate a home’s after repair value to estimate what they will walk away with when they finally sell the flip to the new homeowner.

Estimating a home’s ARV may require some research and planning. What repairs will add value to the home? Where is the home located? How will it compete with similar homes in the market?

Related: The Ultimate Guide to Quickly Estimating a Property’s ARV (After Repair Value)

Take a look around the neighborhood and consider similar properties when assessing your home’s ARV. This analysis can also be a good predictor of how long a house might stay on the market. It suggests the direction that home prices are moving, too.

3. Projected Repair Costs

You won’t reach your target ARV until you make the right repairs on your flip. But how much are these repairs going to cost?

There is no one answer. Every house has different needs based on its square footage, when it was built, and how it was maintained by previous owners. Flippers could have to replace an entire HVAC system just to get the building up to code, or the house may just need some fresh flooring and paint.

The more thoroughly you assess these costs, the fewer surprises you will face when it’s time to flip. (It’s not an episode of an HGTV show unless it has one big surprise repair to keep viewers hooked.)

BiggerPockets has a Rehab Estimator Calculator to help fix and flippers assess necessary repairs. Before you buy, consider which repairs must be done:Exterior carpentry (siding, windows, doors, deck, and/or porch)

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