At the top of the flip calculator is the After Repair Value ("ARV"), or what you expect to resell the property for.
At the bottom of the flip calculator is the expected Profit.
Between ARV and Profit are Purchase Price, Acquisition Costs, Rehab Costs, Carrying Costs, and Selling Costs.
Financing Costs are included in the Acquisition and Carrying costs.
Acquisition Costs, Carrying Costs, and Selling Costs are categories that contain multiple "sub-costs" accessible through the dropdown icons.
You can edit a sub-costs by changing the dollar amount or by changing the formula that calculates the dollar amount.
You can add additional sub-costs to any category typing the information into the blank sub-cost at the bottom of each category. Hit enter and a new, blank sub-cost will appear. To delete the sub-cost, remove the added text.
| ARV - Profit - Acquisition Costs - Rehab Costs - Carrying Costs - Selling Costs = Purchase Price
Selling Costs are the costs of selling the property at it's ARV price.
Excise tax is the local sales tax, which is a percentage of the ARV (e.g. in most of Washington it is 1.78%). Selling Closing Costs are for seller-portion of title, escrow, and buyer mortgage costs; by default, 0.5% of the ARV.
The Selling Commission is what you will pay the agent representing the end buyer and the Listing Commission is what you will pay the agent representing you (the seller); by default, these are each set to 3% of the ARV.
Carrying Costs are the costs associated with the amount of time between initial purchase and final resale. Carrying Costs are calculated on a monthly basis, and you can edit the number of months ("Carrying Time") above the ARV.
There are four default Carrying Costs: Taxes, Utilities, Insurance, and loan Interest Payments.
Taxes are based on the latest county data we have, pro-rated monthly. The default monthly Utilitiesformula is $0.03 per square foot,.The defamonthly
The Taxes are based on the latest county data we have, pro-rated monthly. The default monthly Utilities formula is $0.03 per square foot. $0.03 / sqft . The default monthly Insurance formula is 0.25% of the ARV
The monthly Interest Payments are based on the loan terms on the Financing Card.
Acquisition Costs are the costs associated with purchasing the property (not counting the purchase price itself).
Closing Costs cover the buyer-portion of title and escrow fees; by default, 0.5% of the Purchase Price. Loan Origination fees for the purchase and rehab loans (if used), and are based on the terms on the Financing Card detailed below.
Flip financing terms can be set on the Financing Card, found above or the left of the Flip Calculator.
There are two interest-only loans (sometimes referred to as "bridge loans" or "hard money loans): one loan for the Purchase Price and one loan for the Rehab Costs.
The default interest-only loan terms are 20% down, 2 points, and 12% interest.
20% down means the loans are for 80% of the Purchase Price and 80% of the Rehab Costs. The size of the loan is often called the loan "Principal" and is the basis for the points and interest.
2 points means the loans cost 2% of the Principal to originate. Interest rates are annualized, so 12% is equal to paying 1% of the Principal each month. Because these loans are interest-only, payments do not decrease the principal.
You can edit any of these terms for either loan, along with if your loan also covers the points and interest payments. You can also add the remaining Acquisition Costs to the Purchase Loan and remaining Carrying Costs to the Rehab Loan.
For example, say you have a money partner you pay 8% with no down payments or points, and you pay them at the end of the project. You would set down payment and points to 0, interest rate at 8%, and check the Finance Interest option.
Financing costs are distributed as sub-costs in the Acquisition Costs and the Carrying Costs. Points are in the Acquisition Costs as "Loan Origination" sub-costs. Interest Payments are in the Carrying Costs.
Points are in the Acquisition Costs as "Loan Origination" sub-costs. Interest Payments are in the Carrying Costs.
Because Purchase Price is a cost in the Flip Calculator, down payment is not recorded as a cost. However, because down payment affects loan Principals, it also affects the Loan Origination and Interest Payment sub-costs.
For example, if down payment is changed from 20% to 60%, and loan Principals are halved from 80% to 40%, then Loan Origination and Interest Payments sub-costs are also halved.
Below the Profit on the Flip Calculator is Return On Investment (ROI), Return on Cash (ROC), Return on Resources (ROR), and Return on Value (ROV).
ROI = Profit / Investment
ROC = Profit / Cash Costs
ROV = Profit / After Repair Value
Investment is the total amount of money required to do the deal, between the investor and any funding sources. Because Selling Costs are paid out at closing and never spent by the investor or lender(s), Selling Costs are not an Investment.
Investment = Purchase Price + Acquisition Costs + Rehab Costs + Carrying Costs
Cash Costs are costs that are not financed (or covered by the loan). By default, Acquisition Costs, Carrying Costs, and Down Payments are all cash costs. ARV refers to the After Repair Value at the top of the Flip Calculator.
Cash Costs = Down Payment + Acquisition Costs + Rehab Costs + Carrying Costs