Master Real Estate Deal Analysis in 5 Easy Steps!

Hey guys, how's it going? So right now I'm gonna go over a quick example, real-life example of, you know, how to comp properties and kind of walk you guys through it. This is a deal that we just got under contract, and this is how I analyzed the deal and found out what we could offer. So let's share my screen with you. I'm gonna go through the whole process step by step, right? So let's go to the first step. Find out what the ARV of the property is by using data you have available to you. So right now I do not have MLS access to the property here in Alabama that we're working on. By the way, we got this from Google paid ads, pay-per-click campaign. Um, so I only have PropStream and Zillow available. Okay. Uh, so let's go to PropStream. This is, this is PropStream. It's just titled something different, but it's all the same. So here's the house. So I take a quick look at what is Zillow. So Zillow is not always accurate, so I don't take that as like the gospel. So it says it's worth $291,400, right? So, um, I go over here and I want to see what is selling around that home. So this is a 3-bedroom, 2-bath, 1,924 square feet. It was built in, you know, year built is important, 2011, 3/2. So let's see what's selling around here. Okay, so I usually want to know, I don't want to cross any major roads. I want to know what's selling in the area. Now there's nothing selling around here for sale right now. So I'm gonna look. So this is $100K. This is probably a lot. That's a lot for $175K. So $385K. So this is a 4-bedroom, 4-bath for $385K. So you can— we can go over here to beds. So ours is a 3-bedroom, 2-bath. Let's see what's for sale in this area. So 3/2. Use exact data. Let's see. So this is a 3/3, 2,537 square— 2,537 square feet for $410,000. 275, 3/2, that's it. That's a good comp. It's, it's passed across the highway, but at least it's 3/2, about the same square footage for $275,000. Okay, let's look at it. When was it built? It was built in 2017. So this is a newer build. And it looks clean. I wouldn't say it's flipped because it's a new build, right? But new, nice kitchen, nice stuff. Okay. Nice backyard. So $275,000. So that's a good comp. Let's see how long it's been on the MLS for. Now, let's see. So Zestimate says it's worth $302,000. So now we're seeing Zestimates are probably a little high in this area. It's been on the market for 1 day, so it's very possible this thing could move quick. So $389,000, $260,000. So this is a 3/3. Now it's really important when you're looking at, you know, comps to understand that different neighborhoods could get different, you know, more money. This one seems decent. Looks like it, you know, they did— redid— they remodeled some bathrooms. So it's at $259,000 and it got a price cut. It's a little bigger, does seem a little, you know, like an older build. So this one has been on the market and it's built— let's see, when was it built? Might have already passed it. Let's see. Construction, kitchen, year built. They don't have the data, but this is definitely an older model than a 2010, which ours is. Um, but it's going for about $260,000. So I, I don't know if, you know, the area where I have the deal is— it could be like a nicer area. So I'm going to keep looking for comps. Mine says $291,000. This is $300,000, and they're going This one's going for $275,000. But I'm kind of gathering just so far that it's going to be anywhere between the $250,000 to $300,000 range, if ARV. So let's see what's sold. So what we can do here is see what's sold in the last, um, depending how many days you want. So let's do the last 90 days. Let's see what's sold. So our home is over here. So this is 3-bedroom, 2-bath, 2,159 square feet. It sold for $260,000. And let's see when this sold. This sold last year. Okay, so $260,000, that's a good comp. $200,000, $226,000, $267,000. So let me figure out exactly where mine is again. I like to check. This is the way I know that recenters it. Okay, so mine is right there. So 267, 200, 240. So let's So $200,000, that's not a good comp for me, but this is also, you know, smaller. So $200,000, $240,000. Okay. So this is a— I'm getting some wide ranges, you know, $226,000, $200,000. This is a good comp for us. Let's find out why this was at $200,000, even if it's smaller square footage. Okay. So this is, this is why, because it was sold 2 years ago, 2019. So it's worth, it's saying it's worth about $273,000. I would say, I'm saying from, I'm seeing from what I'm looking at that maybe the estimates are high in this area and they're probably worth like $20,000 less according from this estimate. So mine says it's worth $290,000. Maybe it's worth about $270,000. ARV. But I don't— that's not the only thing I want to do. I want to log in to PropStream and check it out. So let's take this address and do the same thing in PropStream. And at the end of this, we'll have a good idea of what the ARV is. And remember guys, we're still on step 1. We're trying to determine the value of the property. Okay, so next thing, we've looked at Zillow. Let's look at— let's see, we didn't take it. Let's look at PropStream. PropStream says it's worth $250,000. That's probably accurate, $250,000. Let's run some comps. So what houses have sold like hers in the area recently? So all you do is you go to PropStream, type in the address, and go to comparables, and you can change it to public record, MLS data, just whatever returns the most data. So I go to public record and then I look at the map because it's really important. Location is important. So we want to know what's the closest one to it. So this is good. So there's this one, one is really close to it. So one sold just a couple months ago for $250,000, okay. And then you can actually look at the picture on here and see the condition. It looks like it hasn't been updated since it was built, but it looks nice. Nothing crazy. So $250,000. There seems to be another one right here down to— and a 4. So 2 sold for $240,000. And this seems to be the exact match of the property. 3, 2. It's a little bit more bigger square footage. Maybe that Zillow had the wrong square footage. Let's see. No pictures, huh? Okay, let's look at this one. $225,000. This is a 4. Let's look at 4. $215,000. Looks clean. Looks, you know, not updated but clean. So it sold for $215,000 a year ago. 3, 3 sold for $225,000, 4, $2.5 million. Let's see what ours is again. Ours is 2.5. I think ours is a 3. 1,924 square feet, so for $225,000. Okay. So my seller actually, I've talked to the seller and she said this is the exact layout of the property that she has. So this one sold for $225,000 in 2020. So almost actually a year ago, coming up on a year ago for $225,000. And that's in clean condition. So the seller actually sent me some pictures of the property. And the home is in good condition. It's not too bad. It probably needs just clean, maybe some carpet and paint, nothing too big, not a giant rehab. So if this sold for $225,000 a year ago, and it's saying— Zillow's saying it's worth $293,000 now, I'd say it's probably worth about $250,000 now. That's right where— and by the way, estimated value on PropStream is not always correct either., but it looks like from what we're seeing, $250,000 is $250,000, maybe $260,000, $270,000, like in that range is where it could be worth. So next step, figure out the, find out the repair estimate, through pictures, going to the house or asking the seller. So I asked the seller and she told me it needs carpet, paint, nothing too crazy. So after I find out what the repair, I think the repair estimate on a home like this is probably like $15,000. I think that's probably what it's worth. Now, plug in— next step is plug in the info to the deal analyzer. Okay, so I'm going to show you guys how to use this. So let's say the ARV is $250,000. Let's just be conservative and say it's worth $250,000. I have to get it under $250,000 for it to be a deal. Let's just say $190,000. That's originally what she wanted, was $190,000 for the property. So you take what you You put the price that you get the house for here. And $250,000 is what the resale value is. So this, you need to fill out this information, information here, and the information here, and the rest you don't touch. So right here, hard money, because most flippers use hard money instead of cash. You have to account, they take that into account on when they make their offers. So should we. Um, 12% is usually the interest on a hard money loan with 2 points up front. Down payment 15%. The whole time on a property like this would probably be 4 months. You buy it, you put carpet, paint, you'd relist it. Worst case scenario is 4 months. And then they list the— they relist it. A flipper relists it with an agent for 3%, listing agent, and 3% for the buyer's agent. And Um, you can also use this tool. Sometimes I like to do exact bid, but you can also put the square footage of the home in there. And let me look at what the square footage is again. 1,924. So you go here to 1,924, and then you can do what— if you think it's a basic, medium, everything. So I went here to basic. It says that the rehab would cost $34,000. Now, These numbers are a little high in my opinion, but that's— it just keeps you safe so you can get a, you know, big spread and be sure of a deal. I really think to do a medium, a basic rehab on this house is probably going to cost $15,000. So I think this is a little generous. I'm going to go to other. So $15,000. So if I get this house from her for $190,000, Um, and I can flip it for $250,000. If I were buying it, I would make $18,690 after all my commissions and fees. Now, most flippers want to make between $15,000 to $20,000 to $30,000 depending on the price point of the home. I would say someone in this that's going to flip a house at this price point with the risk of, you know, taking on the hard money and all that, they would be okay with making around $15,000. So, um, that means if I need to get it under $190,000 to make anything, to give it to someone so they can make $18,000. So I actually negotiated with the seller and I got her to accept, uh, $183,500. So that's a $25K spread if I was going to flip it. But I, I'm going to actually found a buyer that was willing to buy it at $205,000. So this formula isn't always perfect, but at least it gets you a good idea of where you need to be. So I actually found someone for $205,000, so he must think the home is worth maybe $270,000. So he's going to make his spread, and I have it at $183,000, so I'm going to make my spread of about $20K, a little bit more than that. So it's not a perfect science. But I like to crunch the numbers a couple of ways to say, okay, worst case scenario, it's worth this. If I sold it to someone, a flipper, for that much, he'd make probably $2,000. But maybe the carpet and paint, you only have to carpet downstairs and paint a couple spots, maybe it's actually $5,000. So there you go. There he makes his spread. And you know, at $205,000, he makes money. Sells it for $250,000. So let's, let's look at it one more time. Let's say the rehab cost is actually $10,000, um, because it, you know, carpet, paint, uh, doesn't need that much. I sell it to someone for $205,000 and it's worth $250,000. They make $22,000. And let's say they know something I don't and it's worth $270,000. They made a lot of money. They made a good amount. So I really believe this property, after looking at it, $250,000 is the low end of what it's worth. I think, you know, if you did a good job, you could probably sell it for $260,000, $270,000. So it's very possible. And someone can sell, you know, flip it and make $41,000. I got it at $183,000. So if I was to flip it again, I could potentially, potentially make $64,000 in 4 months. So this calculator is really important. To fill out the ARV, you know, what you got it for. And you have to include the price that you're going to, you know, the wholesale fee. So, you know what they're going to make. Cause you know, if let's, let's say the property was worth $250,000 and the house, and I got it for $183,500 and the house actually needed a freaking giant— it needed everything. It was down to the studs. It was trashed. Everything. Let's see. So this should actually— oh, did I— I'm sorry, guys, I accidentally messed up. I wasn't supposed to fill in this right here, so let's do it again. So $250,000, let's say the house is worth $250,000. I got it for $183,500, and the house needed everything. So if the house needed everything, this guy would lose— I would lose money. I wouldn't be able to wholesale this. So that's why it's important to know the condition of the home. I know from the pictures and talking to her that the house doesn't need that much work. So worst case scenario, it needs a basic rehab, a 34. And, um, you know, let's say I gave it to someone for $190,000. And the value was actually worth $270,000, I could make, you know, a $7,000 wholesale fee, or, you know, for selling to someone for $190,000, and they would still make their $15K after putting in $34,000 of work. Now it doesn't need that much, but again, I'm just playing with the numbers. So, um, that's how you do it, guys. You, um, you mess with the numbers here, you mess with the numbers here. And by the way, let me give you a little trick. Most flippers that are good at what they do They don't list it with an agent that's going to charge them 3%. They usually have a buddy or know someone that will list their properties for 1%. So that— look at the difference. If you can, if you're a flipper and you can find some, uh, an agent to list it for less commission. So it went from 17. If you have— you find someone to list it for 1%, they're going to save money. And if they're experienced, they either have their own license or they know someone that will list it for less. And it's possible that they can get— pay a buyer's commission of 2.5% instead of 3%. So yeah, there's, there's always room, right? Maybe they get their hard money from someone for 10% and then 1 point, right? Instead of 12. Look, they just made— that just added a couple extra thousand dollars. So, um, you know, we, we play with these bigger numbers just to give everyone enough room so you're not making any mistakes. But that's why, like, you know, when I originally had this deal too, I think it was worth $250,000 and I got it at $183,000 and I was able to sell to someone for $205,000. I believe it's only takes about $15,000. It's going to only take about $15,000 to fix up. I think the guy that we're going to go with has his license and he probably gets his hard money for cheaper. So I think that's why even at $10K, some people will do it. Some flippers, they think, they think, yeah, maybe I could stretch and make a little bit more money. Maybe he sees this at $260K. And there you go. That's why he probably justifies being able to pay me a whole, uh, you know, pay me $205K for the deal and I can make some money on it too. So you never know. You just want to be safe. And I felt like $183K $185,000 was a good deal for anyone. And whether I make, you know, the $205,000 or, you know, that guy bails and I can only sell to someone for $190,000, there's still room because I got a $183,500. There's still room for me to make some money. So use this to crunch your numbers and analyze the deals. And let's go back to the steps on how to do this so I can make sure I'm going through the right steps. Sorry guys, right there. So I'm trying to get that— this dang thing's in the way. See if I can move this thing. There you go. Okay, so here it is. So After I plugged in the info in the deal analyzer, determine what spread you wanted to make. I wanted to make, um, I'd like to make at least $15K on a deal. Um, and this, I was able to make a little bit more. Um, and then you want to make your all-cash offer. So I was able to analyze the deal, find out the ARV, put the repair estimate into the calculator to analyze the deal and figure out how much I'm trying to make. And then I got it under contract. So got it for $183,500, found a buyer for $205,000. I'm going to make— what is that? By the way, like, we haven't assigned this one yet, so it's possible that we could make more on it. But let's just say we go with the guy at $205,000. We'd make $21,500, right? So that's how you analyze deals, guys. I hope that was helpful. Use the calculator, use this, uh, you know, step process. It's very simple. Um, just got to use PropStream MLS data or Zillow to get your, uh, you know, find out the data and find out what the ARV is worth. But it's a, it's not a, it's not a science. It's an art. You gotta, as you go, every area is different. Some areas are going to be harder to comp than others, but this is the key to, um, figure out how to analyze in CompDeals. All right guys, uh, good luck.