Calculating Numbers On A Real Estate Investment Deal


all right what’s going on everybody so
in today’s video I’m gonna be analyzing a deal I got this was actually a pretty
good lead it was very close to being a deal and honestly I’m probably gonna
look back like six months from now and look what it sold for and be like crap I
should have bought that condo so let me know at the end of this video if you
think you would have bought this or not and before we jump into this video
please smash that like button and that being said let’s get into it so here’s
the information on the seller this was actually just a 2-bedroom 2-bath condo
it was in the stages of being fixed up it’s an inherited property so I actually
got this from this was a direct mail lead where the seller just emailed me he
didn’t give me his phone number so we’ve kind of been communicated via just email
but here’s the address it’s on the first floor so that was the first thing that
concerned me a little bit this condo building that seems to not really have
that big of an effect some condo buildings the first floor is gonna have
a huge effect but this one it actually because there’s like a patio on the
first floor units it actually helps a little bit so one bathroom idol kitchen
in progress bed bathroom painted still needs second bath refreshed so it seems
like it needs a little bit of work it’s probably livable besides the kitchen
probably just needs some updating so the first thing I do when I get a property
like this is I just go to the tax records so here’s a tax record on the
property and I look for the square footage because with condos square
footage is a big deal you know a house two or three hundred square feet might
not make that big difference but a condo especially on the first floor that’s
gonna be a big difference so 2015 square feet two bedrooms two baths so what I
did was I pulled up all the two bedroom two baths in this same condo complex
that I’ve sold over the past year so this is how I come up with my after
renovated value so fortunately there was there was nine comp sometimes we do
condo searches there might only be a couple that I’ve sold so you kinda have
to be really conservative this you can see this one the sale price and then
there’s also some of these have seller concessions so sometimes when you’re in
lower price points there’s there’s concessions given so you always have to
check for that so 157 – 2000 so really 155 this one sold for about 153 this
one’s coming soon at 150 this is 147 so I’m a
high-end and these are about the same square fringe 1,050 1,050 thousand 59
this one’s 1015 so that was actually the same square footage so I’m gonna look
pretty closely a square footage and then also this is unit 101 this might oh no
this is the unit next door so this one’s gonna be listed at 150 looks like it’s
sold recently oh no so that’s a different address 101 but so there’s a
couple sales at 150 so what I’m gonna do I’m just going to see how renovated some
of these comps are so this one looks like it’s pretty well I mean it’s not
not I mean it has recessed lights hardwood floors bathrooms been renovated
um this bathrooms been somewhat updated tonight you know tonight it’s painted
the washer/dryer that’s newer balcony just go back to the interior so the
kitchens been somewhat update it’s got stainless steel cabinets underwear I
mean so it’s not like a full gut renovation I’m not gonna have to for a
2-bedroom condo 1015 square feet I’m not gonna have to spend like 50,000 even if
the because I I’m probably gonna you know I made this guy an offer without
even seeing the property and I’ll tell you what I made the offer at but let me
just get a couple more so this is pretty nice you know so this
is a newer kitchen I don’t know what’s up with this countertop but they have
recessed lights I’m assuming the recessed lights were added on so that’s
gonna be a little bit of an expense new paint new floors see the bathrooms
aren’t even like fully renovated you know it’s got the old yellow tile it
hasn’t been that up yeah this bathroom has it been updated so you know I’m
gonna budget this repair cost so this guy you know one bathroom remodeled
kitchen in progress both bedrooms painted so I’m gonna budget this repair
cost it may be like twenty-five thousand which might even be on the high side so
it’s gonna be about let’s say 15 for the kitchen and then ten thousand for let’s
say like recessed lights plus if the HVAC or hot water heater needs to be
replaced or just other different expenses there’s not going to be too
many variables with the condo so we’re gonna put the repair budget at
twenty-five thousand we’re gonna put the after renovated value this is at 155
this is 153 150 because this is on the first floor and because this area is a
little bit further away from typically where I like to buy I’m gonna put the
after renovated value at 150 so 25,000 repairs 150 is after renovated
value now like I said I’ve been communicating with this guy via email he
doesn’t know about usually I prefer to call somebody obviously or even meet
them in person but this is what he’s looking for for the property if given a
fair offer of a hundred thousand each cell ASAP if not I’ll continue remodel
and sell via an agent later this year so as you can see I responded back you know
the first ones take a little bit longer there was one that sold for a hundred
thousand I was listed on the market I think he needed a little bit of work so
I offered him eighty thousand and he actually he actually kept it at a
hundred thousand so I’m gonna pull out the deal analyzer right now and kind of
show you what the numbers would look like and this is you know eighty
thousand I would I would buy it you know pretty much without seeing it but let me
pull up the deal analyzer okay so here’s my fancy deal analyzer so
we’re gonna plug some numbers and see if this works oh the sale price that was
the after renovate value 150 you know it might be 155 but I want to be a little
bit conservative the purchase price he wants a hundred thousand okay I offered
him 80 he wants a hundred closing cost you put in about two and half percent
repairs you know I’m gonna put in twenty five thousand that might be a little bit
on the high side let’s go with twenty thousand so that’s about ten thousand
for a kitchen ten thousand for everything else and like you said some
of its been updated and these properties here that sell for 150 they’re not fully
renovated either so it’s not like I have to do a gut renovation so we’ll do 20
thousand interest is twelve thousand if I use hard money Karen costs about
twenty five hundred sales commission nine thousand
so with this numbers like a hundred thousand sounds like a really good deal
if they sell for 150 but if we see down here the net profit is only two thousand
bucks so obviously that doesn’t make too much
sense however I would say I was considering doing this deal because
number one if I financed it myself right if I just put if I didn’t use hard money
I would save 12,000 bucks right there I mean the money theoretically could be
used for something else but I would save 12,000 if I put her you know put my own
money there so there’d be a hundred thousand dollars into the deal next up
because I’m a licensed agent I would also save you know about five thousand
dollars right there so that’s fifteen thousand I would save so now when we
take fifteen and we add it to – that’s a seventeen thousand dollar profit on a
pretty low risk type of deal the reason I say the low risk is because you know
it’s a pretty low price point there’s there’s pretty solid comps and it
doesn’t need a lot of work now I could probably be in and out of this
renovation after like two two weeks I mean literally just one week but between
getting contractors and everything you know to two to three weeks they could
probably be done and get this thing listed and potentially make a profit of
seventeen thousand and seventy two thousand is you know 200k a year just
for like a little condo like this however I passed up on this deal the
because number one you know I I’m stretching myself a little bit on this
one you know to to make a two thousand dollar profit I mean theoretically
seventeen thousand it’s just a little bit tight you know if he’d I probably
would have done I offered him nine I offered him eighty thousand and he and I
thought I mean usually when a seller says I want a hundred thousand or five
hundred thousand and then you offer lower they usually meet you in the
middle or they come down a little bit this guy was pretty set in his numbers
so if he had just come down to like ninety thousand that’s a net profit of
thirteen thousand but then plus interest of you know plus another fifteen so
that’s about a thirty thousand dollar profit I definitely would have done it
at ninety thousand so if you want to copy this deal analyzer there’s a copy
of my website the link is below but that’s you know you got a you got to use
the Mao formula the seventy percent formula but you also have to bring out
the deal analyzer because sometimes if it’s a low risk I was very close to just
saying you know what yeah I’ll make two thousand or seventeen thousand on this
deal so I passed up on the deal for now but you know who knows I’m gonna stay in
touch with this seller a lot of times sellers will drop the price after you
know a couple months if maybe the something happens repairs are taking too
long you just getting fed up there’s different reasons why sellers will lower
their price and call you I’ve had plenty of sellers that have draw I had one
seller that dropped the price by a hundred thousand call me back a year
later with a hundred thousand dollar price drop and I was able to buy that
property so stay in touch with the sellers and also let me know if you
think if you would have bought that deal let me know because I think I’m gonna
look this property up in about three months and I’m gonna see if it sells for
like one sixty or something like that I’m gonna be pissed
especially since these weren’t fully renovated but that’s basically how I
analyze deals I use the Mayo formula I use a deal analyzer and I take into
account the size of the renovation like I would never do like a no hundred
thousand dollar renovation to make two thousand or fifteen thousand dollars but
if I’m only putting in fifteen or twenty thousand dollars to the deal in terms of
the renovate cause you know I you know I’m pretty
happy with that to you and also like the lowest property that’s sold in this
neighborhood sold at 119 or 117 so 120 125 I mean so I could buy it at a
hundred thousand and almost just probably relisted for 120 if I really
wanted to I don’t know if the numbers would work as well at that price but
sometimes people just do that sometimes people just buy it and relist it and
that that could be a good strategy that’s called whole tailing so if the
property is not in like horrible condition like this one I think was
probably pretty livable condition you can just relist it clean it out do some
landscaping or you know just make sure it looks somewhat presentable and then
just relist it on them on the market so we’ll see what happens I’ll look this
property up here’s the address right there if you want to tell me what it’s
sold for if it sold for a lot definitely don’t tell me though because I might be
kind of pissed but thanks for watching and definitely subscribe please like
please share and let me know if you have any comments and I will see you on the
next one hired by

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