1. REI ETUTOR Fix and Flip

2. REI eTutor Fix and Flip Investing Buy Renovate Sell

3. Fix and Flip REI eTutor Know Your Fix and Flip Plan How to fund your purchase Where to locate properties Your exit strategy

4. Fix and Flip REI eTutor Building a Team Buying realtor  Assists in finding properties, making offers, etc. Contractor  We recommend to always use a licensed contractor Attorney/Title Agency Selling realtor  Discount realtor service

5. Fix and Flip REI eTutor How to Purchase Banks usually do not lend on “Fair Condition” properties Your own cash Soft money  Private individual – not in the business of making loans.  Family member, friend, acquaintance. Hard money  Funded by a private individual or corporation.  Short term loans at higher than market interest rates.

6. Fix and Flip REI eTutor How to Purchase Hard Money  Typical Lending 55% t0 60% ARV  What is ARV?  As –Repaired Value  Example:  As-Repaired Value: $160,000  Typical Lending: $88,000 to $96,000

7. Fix and Flip REI eTutor How To Purchase Analyzing a Deal Factors to Consider  As-Repaired Value  Buyer Closing Costs  Holding Costs  Repair Costs  Permit Costs  PROFIT  Selling Costs  List Price  Your Offer

8. Fix and Flip REI eTutor Analyze a Deal Work backwards from as-repaired value Be realistic on your holding, repair, and permit costs  Being too conservative or optimistic can hurt you Don’t be greedy  Average profit is $10,000 to $15,000 Your offer may or may not be influenced by the list price Always consider financing and cash on hand in your offer

9. Fix and Flip REI eTutor Example Property has an as-repaired value of $125,000 Repair costs are estimated at $8,000 Permit costs are estimated at $500 Profit expectation is $15,000 Buyer closing costs: $3,000 Working backwards we are at $98,500. What’s left?

10. Fix and Flip REI eTutor Example continued Estimate hard money financing ARV $125,000  55%: $68,750  60%: $75,000

11. Fix and Flip REI eTutor Example continued Holding Costs  Monthly interest only payments  Insurance  Water/Electric If expected holding time is 4 months then  Payments: 3 months interest  4 months insurance  Water/Electric 4 months Keep In Mind  Turn on fees for utilities  Some insurance companies require payment in full

12. Fix and Flip REI eTutor Example continued Holding costs estimated to be $3,200 Selling costs:  3% commission: $3,750  Listing fee: $250 Goal Purchase Amount: $91,300 or less Difference between goal purchase and financing  $91,300 - $75,000 = $16,300 Cash needed for this deal  $16,300 + $14,950 = $31,250

13. Fix and Flip REI eTutor Where to Locate Properties Realtors  Reasonable selection as many banks do not finance Classified Ads  Handyman special, repairs needed, investment property, rental, etc. See our Motivated Sellers Module for more information on locating properties.

14. Fix and Flip REI eTutor How to Sell List with a Realtor!  Retail buyers trust realtors more than online classifieds  Find a discount office where you pay listing fee and 3% seller commission  Can’t find one? Go to your local REI club’s meeting Craigslist, Backpage, etc. Facebook/Social Media

15. Conclusion REI eTutor REMEMBER Every Offer Does Not Result In A Deal But Every Deal Is The Result Of An Offer