How to Analyze a Flip Deal: The Key to Profitability

0:00You're listening to the Investor Agent Nation podcast, empowering agents and investors to collaborate effectively and grow their businesses symbiotically. Your host, Randy Zimnock and Eric Gross, share real-life case studies, trending tactics, and expert strategies that have helped them to accomplish over $1 billion in sales volume. Whether you're a seasoned agent looking to expand your business or an investor seeking to optimize your returns, you're in the right place. This is the Investor Agent Nation podcast. Today's topic is how to analyze a deal, a flip deal accurately, right? And this one is actually going to be one that he was going after with his investors here in Florida and lend the lakes to be exact. So that's kind of cool. From what I understand, they were a little late to the party, but either way,

1:00we're going to use it as a case study to kind of show you a tool that I've been using, gosh, from the beginning dating back to 2010 when we developed this deal analyzer. And it's been so valuable. Like I came and put a price tag. I don't know what I would pay a lot of money for this deal. And because it saved me a ton of time, it's very easy to have interns. We had three interns locking up deals for us in San Diego back in 2010, 11, 12, 13, those years. And they were just plugging in numbers into the deal analyzer to spit out what we are able to offer out in a property. It was that simple. But first, we need to understand how to use it. We need to understand the market, which we're not going to go into how we're going to comp the property today. That's not the point of today's training. It's understanding, OK, if we know the ARB, if we know the numbers, the big three, what's

2:08the after-payer value, what is the rehab number, how much are we willing to offer, right? And is that going to be accurate in terms of the profit that we're looking to make, right? So that's the fun part. And we're going to make some tweaks to the deal analyzer that can literally double triple your returns when you were not even expecting it. So I'll show you that a little bit later. So Eric, I know you shared some links. So before you share your screen, if any of you are not part of the Facebook group, he shared a link there. So feel free to join the group. That's where we're going to post the recordings of this, make any other future announcements. And then also he shared our YouTube channel, which you could also find the recordings there. So if you could subscribe to that and give us a thumbs up there, that would be awesome. So Eric, share, I'm going to let you share your screen, take it away for now. Awesome.

3:09Let me get this top one. It's going to, OK, cool. It did not repeat me, which is always good. I think drives three nuts. OK. So this one, I'll kind of start how I found the deal and then how I kind of got it running. So Lando Lakes is just, it's actually where we live. It's a little bit outside of Tampa. It's about 20 minutes north. This property was built in 1960. I have the Zilla Lincoln, and I also have our MLS link pulled up. But this actually came through my MLS on one of my investor setups. So this one, Care, and Care is one of the ones that we have that is our trigger words. It's a common word that tends to be used when a workhouse needs to home, when they're essentially got. You mean to be clear, you have filter set up with keywords. And one of those keywords is Care. Yeah. And then you got an email because of that keyword with this listing. No, no, no.

4:09Yep. So got it in kind of knowing Lando Lakes, what to expect with this one. So I had a good feeling, like, so it's pending right now, but 350. 350 is a really good price over here, especially when I started to dig into it. It's sitting on a freshwater little lake area. And that little lake is, I mean, it's a small lake. It's nothing major, but it's very good for like water activities. Anytime you have a waterfront property, people tend to love it. So the more that kind of looked into this, and I'll give you those, actually a little bit smoother than our MLS in terms of looks. So right here, I could kind of tell, based off of the house was situated, we were like right in this back area, got a nice little lake area. And this is somewhere people typically want to be just based off of schools, the size of the home in the lot. We're also interesting. A lot of lots, I mean, point three acres and everywhere else is not very large, but in Florida, that's a good lot size. So found this three-bed, three-bath, 1900 square feet, ram pumps on it, and conservatively,

5:16like not going crazy on the rehab, not doing anything too crazy. I had our pumps at 500. I had a pretty good feeling on this one that if we listed the property, I'd be able to get probably closer to around 525, 30. But when I'm analyzing it for investor, I most wanted to be worst case scenario. I actually did run this back about a month, a month and a half ago, it's been a while. So our market was still kind of slow then, and I wanted to assume longer days on market, not getting the highest price that I could possibly get for the property. So 500 ARVD is kind of where I started. We'll do the deal analyzer with Randy here shortly, but typically off the top of my head, I'm always going to run it, 70% minus rehab is going to be what we can offer on a property. So 70% of 500 is going to put me at 350, so it's going to put me directly at this number. And then what I'm going to want to do is typically go behind that, I'm going to want to pretty

6:19much start how much of the rehab is going to be. So realistically, what I'm going to base my offer is going to be basically this 350 minus rehab. That's when I'm looking for the photos, which I'll do here shortly. So I just kind of know like head. So, so let me, so what you mentioned, you mentioned the Mayo formula, right, which I personally don't like, and a lot of investors use it, and I don't like it for many reasons because I feel like you can miss a lot of deals. So you can, I guess, you know, get to the point where the offer is going to be way too low, where you could have gone higher or it could be the other way around. However, I think it's good to know that the Mayo formula, it's, it's not the Mayo that you put on your sandwich, okay, it stands for maximal allowable offer, okay. A lot of investors and realtors use that language and use that formula for like a quick calculation. I advise against it, right, when I teach, personally, I don't, I've never used it.

7:21I understand, I know what it is. And it's basically is a 70% of ARV, correct? So it's 70% ARV minus rehab. Minus rehab. So that, if your ARV is 500 and you took 70% of that, that's 350, minus 100,000, that would put you at 250. Now, is that a good offer? If you got this property at 250 and I'll show you on the, you know, when I open up the deal, I'm a deal analyzer, that would be a great, great deal. Now, would he be able to get at 250? I would guarantee you that probably the answer is no, okay. And then he would have been leaving basically money on the table in terms of not getting the deal because of using the Mayo formula. Now, I think it's more of a calculation that investors do and say, you know what, conservatively, if I get Mayo, I'm good. But in more, in reality, they usually go above that. Would you agree? All right.

8:22Yeah, we use it basically to say like, are we in the ballpark? So like, well, I'll typically use it for a lot of my investors as if they send me a deal. And let's say I run the ARV and it's 400 and it's listed at 380, I can junk it. Or if it's like 350 and an ARV is 400, I junk it because I know like the offer that I have to put into it is way too low. So but I know that like, so using 70% of 500 puts me at 350. I know like, okay, I'm minusing repairs. This is already listed needing rehab. So I can take that and start to basically go in and minus out the repairs. And then once we actually, so we kind of use it as like, that's our first filter for a property. And then once we walked it is where we start to make this final determinations of like, okay, you know, this yard isn't laid out like we thought it was. Maybe it's not actually a 500 ARV or, you know, maybe that it's, is a larger rehab than expected. It's not going to make sense with offering even 250. So we use it as kind of like a baseline.

9:24Is this even a deal or not? Should we look further now? Let me ask you, did you actually go to the property or how did you determine the rehab number? Was it just through photos and talking to the listing agent? Yeah, this one I didn't go to the property and I actually, so this one, and I'll kind of walk through what I'm thinking mentally when I'm running numbers and I'll even pull it like calculator and kind of show you. It'll be kind of quick, but for this one I assumed, I mean, you can tell, vanity's messed up. Windows, you have, there's a couple photos from the windows. You can tell they're a little bit older vinyl. Bathrooms need gutted, kitchen needs gutted, flooring is outdated. Chimney actually looks pretty reasonable from photos. So if we have any leaning in the chimney or something like that, that's concerning, but I don't see like there no gutters. I would add gutters even though they're not very common. And Florida break exterior, which isn't very common too. So it's actually kind of a nice thing that you're not going to have to re-stuff go. So typically when I look at these photos, I can get an idea like I can tell right it away, this roof needs replaced.

10:26AC unit, you can tell it's actually newer, even though it's kind of farther away, just looking at so many of them, exterior door right there needs replaced, kind of replaced the sliding glass doors, some of these windows were replaced, or wouldn't replace I should say. So we base it off photos. I've looked at it enough at this point that at least came in the bulk of work. Yeah, and I agree. I think by looking at the photos, you can tell it just it needs everything basically inside, outside. So you then you already know your numbers. You have your number of our 100,000 should be enough to do all of that. Talk to the listing engine to see if there's anything else. Maybe that you can't see that they might mention like, oh, maybe there's a, I don't know, a crack slab or who knows, right? Things that the photos won't reveal, but the agent might say or maybe the description might tell us, right? But okay, so, so majority of the properties you're looking at for your investors, you're able to look at it through the photos, talk to the agent. If you need to determine the rehab number and literally submit an offer and, and then if they could get accepted, then you guys go and confirm everything.

11:30Yeah, or even if we like look at it. So like this one was one that I sent out to three different investors. I've been three of my investors by boxes in the Tampa area. And if any of them, like typically what I'll do is I'll send it out and say, Hey, let me know when you want to go take a look at this. Here's the numbers, kind of break it down in an email. Like this is what I'm thinking like ARV is going to be. This is what our rehab budget is going to be. This is what, you know, this is where it fits. This is what you're estimated. Take away is going to be just kind of ballparking it. If they're like thumbs up, let's go take a look at it. Then I'd go schedule it. We do it deeper dive. And that's when I'm actually going to walk around with the no pad and, you know, new roof, you know, it's a pretty large roof on this one. So new roof is going to be, you know, we'll say 15 K, you know, four windows replaced. And that's when I actually break down the cost with them or we'll do it with a GC. Perfect. And then once we, and sometimes we'll even do inspections to like this one sets on a set thick. Set thick is going to absolutely 100% be inspected. And we'll probably like what on this we would actually offer like

12:30you know, this, the inspection period is just for informational purposes only except for set thick. Whatever is requested on set thick repairs is to be taken care of by a seller. Just because it's such a pain if you have some major issues with the set thick. Perfect. Okay. So let's assume that you use, you, I'm one of your investors and you sent it to me. So let me, uh, can I share my screen now full of the deal? Because this is what I would do, right? Uh, if I'm the investor looking at this and Eric submitted this to me, uh, do you see, which screen do you see? Uh, investor agent one. Okay. Just a bunch of pictures of me. I don't know if Emma is piece this together from our group, but every YouTube clip ends up going. No, I don't know. I don't know why man. YouTube likes to pull my face. Where's my, my deal analyzer? I, um, I think this is the one. Oh, here we go. There you go. Okay. Cool. Now we good. Got it. Got it. All right. Cool. So, so this is the deal analyzer that I've used for over a decade or close to a decade,

13:36more than decade. Gosh, in a long time. So if Eric gives me the numbers, I'm going to zoom in so you guys can see here. Uh, can everybody see it? Maybe give me a thumbs up. Yep. Okay. Maybe I can even zoom in a little bit more on some of this stuff right here. All right. Cool. So on the deal allies, I have several tabs. I have the deal information tab. And this is where I'm going to start entering the information about the actual property. So Eric just said after repair value is 500,000. He said the purchase price that they were thinking about offering. He told me, you know, when we talked earlier, they were thinking about offering 300,000. By the time the investors got back to him, the deal was done. And this is what we know we've shared this before. Like deals on the MLS don't last long. Like you got to act fast, right? That's a whole different lesson. But estimated rehab cost 100 whole time, six months from buying, rehabbing and selling, right?

14:44I would say for most investors, this is what I would recommend you use. Uh, the, you know, the ones that are a lot more experienced than maybe the rehab is lighter. This could get shaved down to maybe four months, especially in a seller's market. But in general, we used, we like to use six months property taxes. We pulled that off the MLS listing sheet insurance. This is going to vary based on where you are. I put 2500 for build those risk, uh, or annual, you know, could be up. It could be a little lower, it could be a little higher. It's not going to make a difference if it's, you know, all by 500 bucks. This one has no gas, no water. It's on well. Um, and it's got electricity. So we put 120 per month. And so that would be the deal factors that I would be plugging in. And I'll come back to the purchase price because that's going to start impacting the, the profitability of the deal later. Then I need no financing. So Eric, you mentioned to me earlier when we spoke that your, this client is using hard money, correct?

15:47He is. Yeah. So, uh, he will be financing because he's experienced this hard money lender is actually going to finance a hundred percent of the deal, which I will tell you is rare. Most hard money lenders were lend 80 to 90% right where the buyer has to bring in 10 or 20% down payment. And they will then also finance the rehab cost. Okay. Now they're not going to release and give that money to the investor. They're going to keep it in an escrow count and release it in draws based on progress of the rehab. Okay. So in this case, Eric shared this, this investor is actually getting a hundred percent of the purchase price and is getting a hundred percent of the rehab cost from this hard money lender with two points and 12% interest. So I would put two points right here, loan points and interest rates 12. I would put that over here, which would make the loan amount 400,000. So if you look at purchase prices 300 plus 100, that's how you come up with 400,000.

16:50If he were to buy it for 300 with a rehab cost of 100,000. So that's why the loan amount becomes 400,000. Eric shared with me that he would be coming up with the money, uh, the buying costs out of his own pocket. He would be paying the holding cost out of his own pocket and usually with hard money lender, there's going to be a monthly payment, right. So all we have to do is put yes or no. And if there is no monthly payment, it will calculate it correctly on the other sheet. In this case, there is a monthly payment and it's going to be estimated at $4,000. Okay. So, uh, what else? So since there's no second mortgage, this is blank. Okay. So I don't enter anything in here. This is only a first loan. That's all they got. Tidling assurance. I don't know for Florida. If this is accurate, you might not know this Eric. I don't want to put you on a spot, but I'm just going to lead.

17:52Pretty close. Pretty close, probably. Missilane is buying costs. I'm going to put 1200, you know, between. Escro and title and recording costs, whatever. Probably 2200 is a fair number in closing costs is that low. What was it? 2200 for total closing costs. It's a little without title without title. Oh, without title yet. That's about right. It's not. We don't have too crazy. Okay. Perfect. And then on the selling costs, Eric said that he's going to be listing this property. If they were to get it at 6% offering three to the buyer's agent and you keeping three, is that? Yeah. So we put 6% there. Then we got your transfer, convinced fees, which I don't know what it is for Tampa. But I'll just leave what we have in here for now. Missilane is selling costs. This could be, you know, notary fees, things of that nature staging.

18:53I'm guessing he's going to stage. I don't know. Does this investor stage, do you know? I've never, I've only staged one property of my entire life. I know it's a million dollar property. So most of them I know. They don't stay. Well, not you, but the investors don't stage. Wow. I've never had an investor stage. Okay. Well, then let's put zero. Why? And say, and you go, I mean, 90% of my investor stage. So great. Yeah. Then I mine. I never had anybody do it. All right. So I'll remove that fair. Escrow attorney fees, a thousand recording, home warranty, marketing costs are going to fall under the realtor. So zero there. There's your selling cost. If you ever take, if we're off by 500 or a thousand, again, it's not going to make or break the deal. Okay. But if you get your rough numbers that you know, for your market, this is where you put it in. And the way this is designed is deal analyzer that the yellow ones. You should not have to edit.

19:54Per deal. Like these are standard. Or whatever your market that you're in in terms of your buying and selling cost. Everything in yellow should once you decide what those numbers are should be not edited. Technically, right? So then all you're really focusing on is the things that are in the way, right? The white cells. That's what you're editing. All right. Cool. So once I input all this, it takes all the information and spits it into these. Second sheet, which is the deal analyzer for flips. And notice it carries over the $500,000 after repair value, the repair costs, purchase price. So everything I entered there, it carries it over. But it also starts calculating our holding costs automatically. Right? There's so there's a lot of formulas built into this deal analyzer. So I don't have to do it in my head. Right? I need to be able to plug the plug things in quick. Right? On this front, on the first sheet, and just tell me where I'm at.

20:55Like, what do I need to be offer-wise to make this deal work and then onto the next one? Right? So when you look at the first mortgage, everything is calculated here. $8,000, that's the two points. Right? Because one point is basically 1% of the loan amount. So if I'm borrowing $400,000, one point is $4,000, we're paying two points. That's 8 grand. Okay? And you pay that basically up front. Right? First mortgage interest is 12% annually. Okay? So based on our six months hold time, it automatically calculates it and says that we're going to actually spend $24,000 in interest over the six months period. Right? If we kept the property for a year, that number would be $48,000. Right? It would be double. Right? So my total first mortgage cost, it adds up quick. Hard money is expensive.

21:57It's $32,000. Okay? No second mortgage. So those are zeros and there is just this small miscellaneous financing cost that we always like to stick in there for 500. And then the holding cost, they're all broken down by monthly on purpose because it's all then auto calculated by the amount of whole time we put in on the sheet, the first sheet. So we need to know how much is property taxes per month to calculate our holding costs correctly based on our whole time. So this is where it breaks it all down for us and starts calculating the actual holding cost per month, right? For six months. And then you got your buying fees that we entered. So all of this gets carried over and calculated on this end. Here is your realtor fees, 6%, that's 30 grand. If we sell it for 500,000, here is your transfer conveyance, all the numbers that we've put in, including some of the calculations again, you get transferred over to this final sheet that you're

23:03looking at right now. Okay? And basically right now, if they were to offer 300,000, conservatively, they would make $28,000. Now to some of you, and we're like, well, that's not a lot. And to some of you, we're like, well, I would do that deal for $28,000. So everyone's going to have a different flavor of risk. And this is one thing I will point out right away is you might hear a lot of investors say, I will not touch anything if the cost that ROI is not 10% or higher. Fair, but that's their flavor of risk that they're willing to work with. Because if that's what they will tell you, then in some markets, they might not get a deal for a long time. I can tell you when someone asks me that question in San Diego, Randy, what is your company? What's your ROI? What are you guys looking for? I would say, I don't know, it depends on the deal.

24:03I said, if you're going to give me this property that we're analyzing right here and tell me that this is a full gut. And I got it literally knock out some walls, there's mold, there's this. And I have to put in $200,000 into a property even though I might get it for $200,000 to buy. But now my repair number is $200. Technically, I'm still into it for $400, but my rehab is intense. I would want my rehab profit number to be larger when my rehab is more intense. If my rehab is not as crazy and it's just a quick in and out, nothing too crazy, then I'm willing to push my limits on my profit margins and make a little less. Also, I look at, well, am I buying a property that's a 2-1 that has no yard? Well, if I'm doing that, then guess what?

25:03I want my profit to be higher. Because my pull-up buyers are smaller, there is more risk I'm taking on. But if I'm buying a property that's a 3-2 with a yard in a great neighborhood, with a driveway, with a garage, and it's your typical rehab for $100,000 inside and out, then I'm willing to maybe make $25K because I want multiple deals like that. That's how I did it. Now, again, you don't need to do it that way, but I'm sharing to you if you're an agent listening and working with investors, you need to understand your investor's flavor. Like, how are they? I wouldn't ask them what the ROI is, to be honest. I would ask them, if I presented you a property, that's a 3-2, no negatives, beautiful neighborhood, with an ARV of $500,000, what would you be okay making? I would rather know that number instead of the ROI. Because that can get you more deals potentially.

26:05I can tell you a lot of investors are more like me because when someone asks, what ROI do you want? A lot of them will depend on the deal. Tell me more information about the deal. I'll let you know if I'm willing to push my limits on it. That's how I made my decisions. Eric, I'm wondering, how are your investors? Are they usually working of a specific ROI? Are they just more like, you know what? It's a deal by deal. Tell me the deal and I'll tell you if I'm in or not. Yeah, it's a deal by deal. Like, if it's a really, really good area and they know that, like, because I was telling Randy before this, like, this I've run, I'm kind of counterintuitive. I run my numbers as conservatively as I can. So, like, I realistically feel like I can probably sell this for around 520. And most agents are going to obviously push that up and say, well, I can sell this for 520. But I would rather tell my investors, like, you know, 500. Let's be conservative. Markets been a little bit slower. And if I pull it up like the Zilla, the link, there's like, it's a nice area and it's on a lake.

27:06And there's a lot of benefits, but also just with the way our market is, there's a lot of inventory. So, you know, there's like 12, 13 other homes listed in the area. So, I would have a little bit more conservative on that, but also on, like, the rehab, you know, 100K, I went over on that. Until we walked the property, I'll start knocking it down from that 100K. I work high and then I go low as we start to go through it. And we still keep like a good contingent in there. But it's deal for deal. I mean, I've had, you know, I've had investors run, like, I went and touched this deal, but they love the area and they know it. And they know that it's like, you know, high growth, like, even in the sense of anywhere there's neighborhoods where it's like, yeah, I don't care if that's what your ARV is now. Like in six months when we wrap this up, we know it's, they're kind of betting on appreciation. So, I think it just kind of depends. Yeah, perfect. And that's how I operate it. And I find out a lot of investors, that's how they operate. So, learn your investors kind of, you know, way their, how they analyze deals. If you're the investor yourself and you're working with realtors,

28:09what I would do is actually educate the realtors on these numbers. Because a lot of realtors are just not experienced working with investors. So, if you're calling an enlisting agent, right, and you're telling them, you know, hey, by the way, can you represent me? Like a lot of things, a lot of things we teach, or at least I do, is go through the listing agent if dual agency is allowed, right? So, if the listing agent is also representing you and you present them with an offer at 300,000 with no explanation of how you arrived at it, a lot of listing agents that never work with investors, because they just maybe happen to get a listing that needed work fall in their lap, but that's not really where they operate as an agent. It might, it might scare them. They might be like, wait, I have to present an offer at 300 to my client, or 250, like, what the heck? So, I, what I would teach, you know, I used to do this myself, then I would teach my acquisitions guys to do this. I wanted my acquisitions guys to first get on the same page with the listing agent on these things,

29:16like, hey, Mr. Listing Agent, by the way, before we, you know, talk about the offer that we came up with, what do you think the property would sell for if it was fully renovated? I want to know what they're thinking, because if they think it's 550, and I think it's 500, we're already off by 50k, just, just to start. So, whatever offer I present to that listing agent, and, and I'm even though I'm asking them to represent me, and they might be excited to do so, they might feel weird presenting that low over an offer, or they might not want to do it with you, right? Work with you in the future, unless you educate them, like, wait, by the way, so how did you come up with 550? Maybe I missed something. Can you send me those comps, right? And I would play naive and ask that agent to send me the comparables, so I can start comparing, and be like, hey, here's the comps I use, here's your comps, great. And what I'm trying to do is get on the same page with the agent that, hey, you know what, the after repair value is actually 500.

30:20Would you agree now? Oh, yeah, you know what, you're right. I think that's a safer number. Or maybe I was wrong, and then I can increase it to 525, right? But I also, I always wanted to be on the same page as an investor and the agent that's representing me on the after repair value, because all of the calculations start from there, right? What is the ARV? What is the actual repair cost? And then I would start educating the agent. So by the way, you know, so we're on the same page on the ARV? Yes. Okay, so just so you know, Mr. Agent, I used a rehab amount of about 100,000 on this property. We're going to hold it for about six months. You know, yes, we, you know, we, we, we say we use cash, but you know, we pay interest on the cash. So we have financing costs, right? On the cash that we use, right? So I literally educate my agent to so they understand how quickly money disappears, right? Because a lot of realtors, they just don't get it. Nothing against them. They're just not educated. I, I went as far

31:24as sending them a PDF of this. And I would be honest, like, look, if all goes perfect, right? Which you never does, and I chuckle, right? Because you never does, right? We are looking to make about $28,000 on this deal. If we were to submit an offer with you at 300,000. So with everything I just told you, how do you feel about that, Mr. Agent? And I can tell you they take, you know, it still shocks a lot of realtors, right? But then they take it, they can look at it from your point of view because I've explained how I arrived at that number. And I'm not trying to make a killing. And I told them exactly what I'm looking to make if all goes perfect, right? And this is where I think a lot of investors or new realtors working with investors fail because they don't get on the same page with the realtor that they're about to submit an offer on on behalf of their client, right? So just a side kind of education piece, right? But also it's kind of related to the deal

32:26analyzer because I literally would share this with them. And if any of you, I don't know if you have this type of a deal analyzer or not, but if you would like this, I'm more than happy to share with you guys. Eric, if you want to, can you type in my email, reindeer, realtinational.com? And I'll email you guys this deal analyzer that we use because you're here in attendance because you're here live, you're going to get as a gift. So congratulations. But there's a hand rate. I'm going to go to Cornell. Go ahead. Thank you guys. So I have a quick question. I'm a dually licensed as the realtor and lender. And I'm also certified as an express certified offer, whatever that means. The investors I work with, they don't want to see the property listed in the MLS. The investors, you're referencing, do they care if any property is listed in MLS? Like you mentioned Eric, you found it in MLS. Excuse me. Yeah, I've definitely had investors that don't want deals

33:33on the market cent to them. But I will say, as a realtor, you can do marketing for off market properties and do what that as you want. But that's something that we've had conversations with investors, where it's just something that we, if they want to do it, we'll help them, we'll help them target it. We'll help take hand-bound leads and things like that. But we won't directly spend that. So I think a good thing to hit somebody back with is they're like, hey, I don't want a deal unless it's off market. It's like, okay, well, if I find you a good deal on a market, you don't want me to spend the deal. And most investors, if they're serious, they don't care whether it's on or off market. They just want the deal. Yeah. So I don't want to get off topic. Good question. And I would answer real quick to you. I've built my whole investing business in San Diego when I was running that company for seven years. We filled 350 homes and 90% of them came from the MLS. So if you just find the investors that don't care and I didn't care. Okay. Right. So that's it.

34:38There's plenty of investors that will, they don't care where the deal comes from. The numbers make sense. They're going to go after it. Right. Yeah. That's how I feel like it. But yeah. Okay. Thank you guys. No problem. So let me show you the power of this. Right. So imagine that Eric offered 350. Right. All I do is I go here and just be like, all right, well, at list price, what would this look like? Negative 26,000. Congratulations. You got yourself a negative property. Right. You're going to lose money at list price. If all these numbers are true. And I do think, you know, 500 is good number because we are, you know, in Tampa from what I see, it's, it's a buyer's market right now. Right. So we have to be. And rehab costs, you might be right on the, on the money here, dude, because Trouch, quite honestly, what he used to cost me 70,000 to rehab a whole house. 100,000 goes quick now. So you right there on this number, man. So the one thing with the 100, the one thing with the 100 is we're like cheaper here in terms of like repairs. So that's what

35:42I was going to talk about when we're going to go through the property. Like a roof is going to cost about 15, even if you're talking 10,000 for windows, it's going to put you at 25. There's not a ton. You can do hurricane windows and you might be like close to 30 altogether between those two. The rest of it's just cosmetic and at 1900, a square foot, we typically try to multiply it out. And it's usually going to run for something like that, probably about 30 square foot. But you can kind of get cheaper too, just because a lot of it, like flooring paint and then bathroom's kitchen is a terrible cell. But yeah, and I think I'd rather run it conservatively anyways and keep that cushion in there too. Perfect. So let's assume that you locked this deal up and honestly, you know, this deal I would do all day for 28,000 and lock it up personally. Yeah. Yeah. Because I know that Landel Lake is a great, great area. This property has everything that I want. It's got the great square footage. It's got minimum three bedrooms. It's got the garage. Everything that a buyer wants, there was the biggest pull of buyers for this house. That's why I like it.

36:47Right. I personally would say, you know what? I'm in Eric. Let's go. Let's submit an offer at 300. I might even push myself a little bit, maybe 310. And maybe I would negotiate with Eric if I'm getting close, right? If I'm getting close, getting the deal, I would say, Hey, Eric, what if we could maybe, you know, can we do maybe like 2.5% of the buyer's agent and maybe 2.5 to you? Can we do it for 5% total? How do you feel about that, Eric? And especially if the agent tells you that you'll get the deal done for that. Yeah. Thanks, Eric. Man, I appreciate that. Right. Let's work together. So now we lowered that to 5%. I upped it. I upped my purchase price by 10,000. I lowered Eric's fee to 5. He's a good realtor. He likes to work as a team. That's what I always like to work with agents that are not stuck in their ways and they're willing to be flexible to make deals happen. Yeah. Right. And I'm like, all right, 22,000.

37:51You know what? I haven't seen the property yet, but Eric, I trust you for now. Let's lock it up. Give me that, you know, that 3 day or 4 day contingency for the septic. And if I go there and everything looks completely not what I thought and whatever will end up backing out. Worse case scenario. Yeah. But I feel like I would lock something up in a very conservative number because Eric already understands how I work. Right. He understands the ARV, which is the most important part of this whole investing game. Right. So I trust him as well. But I also know that I have a potential out if I really need to back out. And in worst case, 22 is not terrible. Now is that great? No, I would probably want to see personally minimum 25,000. But what I would probably start working on in the background is maybe I can lower some of my financing costs. And this is where things get interesting. So before I go there, Eric, what do you want to share? Yeah, I was going to say to like, and I don't

38:55want to get spend too much time on it. But part of the reason that steel bests and doubts and multiple investors was that also had multiple annexes strategies. So this was one that I think you could air be and be being on the lake, have some jess keys on the property or like a canoe or kayak long term rental. Like this is like tons of rentals in this area, especially for the school district and stuff. So it might be one that you can burr, you're probably not going to cash flow at the end, but you get good appreciation with loan pay downs. I think midterm would work. There's a lot of hospitals in the area. And this is near a really large. So I was going to say to like, you know, and that was included in my emails to my investors was this wasn't just a flip. This was like three or four different outs on the property, which we try to look like they're typically asked to be two for us to do it. Got it. Got it. Yeah. And I think we were talking about maybe the next month we're going to do a similar thing, but on the rental analysis. Yep. So deal analyzer for rentals. So we because we don't have enough time to do it all in one. We're going to break it up. So check this out. So

39:57imagine I lock this property up, right? And I buy it. And everything checks out. I buy the property. But then maybe, you know, right before closing, I end up getting better money, right? This is where things get really interesting. So let's imagine I end up getting 100% private money instead of so let's flip the script instead of hard money. I get private money. Well, actually, let's just use let me just go back and use the top. I don't need to go through all the. So this is 5% we agreed on. So zero points. So private money usually will pay 10 to 12%. So let's just say I got a private money lender at 12% with no points, right? And I got I slipped it in the right before closing. What would that make me? All right. Now it's already 30 grand. I eliminated two points because I just I was able to find private money because I knew I had a good

41:01deal. I was a week away from closing. I brought it to some people that I know and they were willing to lend on it, right? And I just shaved off $8,000 in expenses, right? So there's 30,000, right? Then what could happen maybe not, you know, in in Tampa right now because we're in a buyer's market. But in San Diego, what could happen? Right? We might sell this property before it even like gets fully, you know, hits the market, right? Because there's buyers, there's lack of inventory. So imagine I close on the property with private money. I'm renovating it and a buyer approaches me and wants to buy it off my hands. All the sudden, guess what happens? I talk to Eric. I still pay him his 2.5% because I approved, you know, I agreed to pay him no matter what. So now I don't have to buy a buyer's agent because they reached out to me directly. So my commission goes down, staging,

42:03I guess we're not doing staging anyway. So because Eric's investors don't like staging. So there's nothing there. And then our holding time would not be 6 months. We probably would be in and out of it then in 4 months. If I find a buyer during my renovation, there is a high probability that I'm going to get it off my books faster because the 6 months calculates buying, rehabbing and putting it on a market for 30 days and then an escrow for another 30 minimum, right? And then market 30 days and time for now, it might be more, right? But if I'm in San Diego in a seller's market and I get a buyer right away, then that my whole time gets shaped off. Look what it does to the number. 52,000. Like 52 already. And I changed 2.5% and it went from 4 to 6 months to 4 months, right? And I literally just doubled my returns. So I was about to make 22, 23 when I was acquiring the property.

43:06But then I exit and make 52. Now I would not make a decision, buying decision, assuming that this will happen, right? You never want to do that. This is all bonus, right? But I've seen investors buy properties with all of these crazy assumptions. Oh, the market is going to keep going up and I'm going to make an extra, you know, I'll sell it for more than the last comp because the appreciation and no, no, no, no, like you can't make those assumptions because that's how you get out of the business quick. Or if you're realtor working with that type of an investor, they might buy that property from with you. You'll make your commission and then you'll never do a deal with them again because they're going to lose their shirt and lose their company right there. Right? And most likely they're going to blame you for it. Unfortunately, you the realtor. Yeah. Even though maybe, you know, it wasn't even your fault, but they will roll you right into that, right? So I rather stay conservative. Don't make a lot of these optimistic assumptions, but I want to show you how quickly

44:12the numbers change. And I don't have to calculate this in my head. I don't have to do it in an app. I don't have to whip out my own calculator and Excel. She it's all done already in this deal analyze. Right? And I can literally just change a few numbers and I could see the potential of any property within a minute. So I want to just to share the power of something like this. If you're working with investors as an agent, ask them, Hey, by the way, you have a deal analyzer that you run your numbers through. And if you do, would you mind sharing it with me so I can basically do it for you and not waste your time with the wrong deals? And a lot of investors have something like this. If they don't, then you could be the one that says, Hey, you know what? I have this deal analyzer that I use to calculate offers real quick for my investor clients. Would you like to take a look at it? And then I'll send you send it over to you. And let's get together on whatever Monday or Friday.

45:16And let's dial in these yellow numbers and your financing costs. So that way, I don't have to change them every single time. Right? And I would say, Okay, so usually when you buy your property, Mr. Investor, what is your financing? How do you get it? Oh, I can get private money. Great. So you now you understand how they acquire how they, you know, what are all their costs? And you can put it all in here. So then you can run all of the information for them in your deal analyzer based on the data they gave you. Right? And it will save you a lot of time. It will make you look very profitable to the investor guaranteed if they didn't have anything to begin with. And believe me or some investors, they don't, they do not have anything. They just use like the Mayo stuff. And I'm like, how are you even doing this business? Right? But we'll make you look I will say to God that I did my number one investor since today that we did 50 flips with. He did Mayo. And every single time like we nailed it, like it's just like we'd walk like he'd know I'd

46:21send the property like within 10 seconds, you know, like you have the works or like thumbs down, we'd be at the property the next day with like an offer accepted and closing. So like for some people, it's it works. We never use the deal analyzer. But I also know that like this is more, I also think if you're a realtor and you want to show your investors like, hey, look, this is your possible, you know, takeaway. This is the best way to do it because it's very detailed and dialed in. And if you're having a hard time getting people to pull the trigger on investment properties, this is the way to do it. Present numbers like this and in this kind of presentation and your investors are going to, you know, they're going to have no problem pulling the trigger. Yep. And you know, what you'll find on this deal analyzer for some of you that are going to request it, you're going to see a repair estimator in here as well. And this is, you know, general, right? This is not per market. But if you're new to the investor investor world as a realtor,

47:21or even as an investor, this can get you in the ballpark of what that rehab event will be. Okay. So you can literally go through this and fill in, you know, if it needs a roof, and it will auto calculate it based on the information you put in. I didn't fill this in. But if I put in the square footage right here, I think it was like almost 2000. It's one unit, 2000. It was three bedrooms, three baths. But if you go to the repair estimator and you put a roof, yes or no, it should auto calculate. Well, maybe it's not auto calculating. All right. Well, I'll get you the version that it will. It should auto calculate based on the numbers that I have here. So that's interesting. Why it's not doing it. Let's see. So someone wants to mess around with this one. But nevertheless, I'll get you the one that works. But then this will calculate it

48:24and the way this is designed. Oh, yeah, he must this is someone messed around with this one. Okay. The way this is designed is that this number, this after repair value in the one I give you is going to get pulled into right here, this number estimator repair cost is going to get pulled from this total right here. Okay. Automatically, I don't have the time to go through this, and Eric wouldn't either. So what I do is I just overwrite this and I just type it in. Right. But I'm just letting you know that the one that I'll give you, if you're requesting one, it's going to be pulling the repair number from what the total is right here. Okay. And dumping it into this field and it will dump it automatically into this field. Right. What I do,

49:26I overwrite it, right? Because when you when you're just analyzing deals and I already are given these numbers, what the repair cost is, I'm not going through the repair estimator. I just overwrite this personally and that's that's it, right? That's what I did here. But I just want to let you know what's in here, right? And how it calculates it. So I don't I can't see the chat right now, but Eric, is there any questions on the deal analyzer or just overall just analysis of deals? Numbers. Well, we had two questions while we were doing it. I'll start with the one that had to do it this. We need a better private money loan. How do you communicate? Can't sign with the previous lender? Always maintain relationships. Like if you are going to if you are going to switch lenders, make sure you let the other one know respectfully and just let them know why you're kind of going that route. But I think Addison can speak to this. Lenders are used to that happening. So it's not uncommon. Even my hard money lenders are used to it happening. That was the only one on the deal

50:29analyzer. If you may else has any other questions, I can answer this one too while we're trying to regarding the recent NAR DOJ proposal. How do we deal with the buyer's real recognition since going forward? We probably can't disclose it anymore in the NLS. That's just a question. It's going to be more like ask or brokerage. It's going to be regional. I think it's going to be different for every area. Not something that we'll be able to necessarily give advice on as we see change there we can. Calculate it. Still calculate it. I would still calculate it. You're paying it. Don't assume that all of a sudden you're not paying a buyer's broker. So as investors, we're going to nothing will change for us in terms of costs. Right? So I'm going to assume I'm going to pay a buyer's agent two and a half percent or three percent depending where you are in the market. And don't get cheap. That's not where you want to get cheap. You want to expose your property to as many people as possible. So yeah. And that's a whole different conversation if you're you know a buyer is working with investors and you have to have a buyer broker agreement. You probably want to have

51:33an open-ended one right because they probably won't commit to you only but a conversation for today. For more insights and to join the investor agent nation community visit investor agent nation.com If you like this episode please subscribe to the podcast and leave a five star rating to help Randian Eric continue delivering valuable content that resonates with you. Thanks for listening to the investor agent nation podcast.