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Congratulations to Dr. F. DuBois Bowman ’92 on his appointment as the 13th president of Morehouse College! We’re especially proud to welcome Spelman…
Congratulations to Dr. F. DuBois Bowman ’92 on his appointment as the 13th president of Morehouse College! We’re especially proud to welcome Spelman…
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Meta is raising $29B to build AI data centers across America. They’re not using public debt or their $70B cash pile... Meta is engineering one of…
Meta is raising $29B to build AI data centers across America. They’re not using public debt or their $70B cash pile... Meta is engineering one of…
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Journey > Destination, but recognition, especially team recognition, is always very special. Very proud of our entire integrated marketing team for a…
Journey > Destination, but recognition, especially team recognition, is always very special. Very proud of our entire integrated marketing team for a…
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Experience & Education
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SmartThink Marketing Group Inc.
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An Inside Look at a Fix & Flip Investment Deal
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Property Details at a Glance:
- Purchase Price: $225,000
- Rehab Budget: $50,000
- After Repair Value (ARV): $345,000
- Loan-to-Value (LTV): 80%
- Down Payment: 20%
- Loan Amount: $230,000 (80% of ARV)
Crunching the Numbers
1. Property Valuation:
The ARV of $345,000 was determined through a detailed appraisal and market analysis. By reviewing comparable sales in the area, the investor gained confidence in the property's post-renovation value, ensuring a solid…Property Details at a Glance:
- Purchase Price: $225,000
- Rehab Budget: $50,000
- After Repair Value (ARV): $345,000
- Loan-to-Value (LTV): 80%
- Down Payment: 20%
- Loan Amount: $230,000 (80% of ARV)
Crunching the Numbers
1. Property Valuation:
The ARV of $345,000 was determined through a detailed appraisal and market analysis. By reviewing comparable sales in the area, the investor gained confidence in the property's post-renovation value, ensuring a solid profit margin.
2. Rehabilitation Costs:
The property needed a range of renovations, with $50,000 allocated for improvements. This budget covered everything from necessary repairs to cosmetic enhancements, all of which would elevate the property’s value and buyer appeal.
3. Loan Structure:
The lender provided $230,000, covering 80% of the ARV. With a 20% down payment of $57,500, the investor had enough capital to acquire the property and begin renovations without overextending financially.
4. Cash Flow Analysis:
Projections accounted for the full range of costs: loan repayments, property taxes, insurance, utilities, and any other holding costs. This thorough analysis allowed the investor to forecast net proceeds accurately and ensure the project would remain cash flow positive throughout the flip.
ROI and Cash Flow Outcomes: A Big Win
With the renovations completed on time and on budget, the property was listed at its after-repair value of $345,000.
A. Renovation and Sale:
The renovation significantly boosted the property’s marketability, and it sold at the expected price of $345,000. This allowed the investor to realize a gross profit of $95,000
II. ROI Calculation:
The project achieved an impressive ROI of 38%, calculated using the formula:
ROI = (Gross Profit / Total Investment) x 100
II. Cash Flow Analysis:
Throughout the project, cash flow remained positive. Holding costs and loan repayments were well managed, and the final sale exceeded expenses.Other creators -
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Had a great time as guest lecturer at McCombs School of Business, University of Texas, Austin, discussing research, insights, and strategy…
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I thought I was getting fired every week. POV: You’re crying in the bathroom over a slide deck and then your mentor changes your life. Filmed this…
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I’m happy to share that I’m starting a new position as Founder, Managing Partner at Ironleaf Capital. ILC is a purpose-built healthcare private…
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I’ve felt the emotional toll of the past few months weighing heavily on DEI practitioners and researchers—it’s been intense. But yesterday’s session…
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Proud to have La Mer spotlighted as a best-in-class partner in the launch of Uber Advertising’s Creative Studio. With the “Go Home with La Mer”…
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