Full Video Transcript

Hey, good evening, everybody. This is Pat Wilver with Trophy Point Realty Group out in Savannah, Georgia, here to walk you through a little deal analysis. This is the, the nerd stuff that we do before we put a deal in your contract. So I’m gonna show you my screen. Here it is. So this is, this is, this is my spreadsheet. This is what we look at. So this is a lot I, I really like spreadsheets. I enjoy making them. So yours doesn’t have to be anywhere near this complicated, as long as you get the same terms. And a lot of people look at a flip, you know, all they’re looking at is I buy it for this much. I put this much in the rehabbing. I sell it for this much, and my profit is the difference. And that is not the case at all. Because you’re paying interest. You’re paying well you’re probably paying a realtor. You’re paying insurance taxes, utilities, all kinds of things. So we’re gonna break it down real smooth. Like this is 806 East 33rd, Savannah, Georgia.

So this is where it is on the map right here. If you’re not familiar with Savannah basically this is the historic district. This is where the tourists hang out. This is the million-dollar homes and all of that. Here’s Forsyth park. This is all really nice stuff. This kind of a chic, locals-only district Starland district. This part of town called the east side is kind of on an up and up. A lot of investors are coming in, buying up distressed properties rundown places, fixing them up, making them nice, selling them, renting them, whatever the deal is. I really I’m pretty bullish on this part of town. So I’m, I’m, I’m pumped to get this deal and look at a little street view. So here she is, right. This is our, this is our new deal. So this block is a lot of these craftsman-style, little bungalows. Ours kind of unfortunately has this closed in porch, um now and it does add square footage. Usually more square footage is better. I’m not so sure. Well, I like the porch better, but it’s not in the budget. It costs a lot of money to, to redo the layout of a whole house. So we’re just gonna leave this as it is probably spruce it out, but let’s not get into that too much right now. Looking at the neighborhood. So this is a pretty decent street. This is honestly a decent little street. The thing about Savannah, if you’re not from here, is this town is very block to block and the character of neighborhood can really change quickly. So it’s important to really know it. If you don’t know the area, like it’s not enough to just look at the street view. If you are an out-of-state investor, you got to have somebody who lives here, who knows, you know, what what’s going on, whether that be a business partner, you know, an equity partner or an agent or whoever. So here’s your property. What’s the first thing we do? Well, the first thing that we do is, you know, before we do all the work at filling out all the cells in the spreadsheet, we kind of take a quick, quick look at the deal. In this case I was told that I could get the deal for $98,000,

Right? Actually I was initially told the price was $125k. And I worked a guy down, but let’s start with $98,000. So $98,000 for this, this is a 2 bed, 1 bath, about 1200 square feet. And I knew just, you know, by all the business I do around here that a property like that, you know, probably sells between $180k and $210k, right? So let’s, you know, go kind of in the middle and say $190,000 ARV. So it’s gonna be worth $190,000 when we sell it. That’s where we start. Now we apply this thing called the 70% rule, which is what we use to quickly screen a deal. So we take basically that final number $190 x 0.7 (70%) gives us $133,000. So $133 is kind of what we want our all-in number to be. Then we got to think of what the rehab budget is. So, you know, I said, this guy first pitched the deal to me at $125k. I said, well, you know, if, If your number’s $125k, it’s going to be pretty much turnkey. None of these houses ever are turnkey, by the way, if you don’t know means basically it’s good to resell just the way it is. It’s like a perfect house.

So $133k, usually the cheapest that you would do a cosmetic renovation on a house that big would be about $30,000, right? So $133k minus $30k equal equals $103k, probably want to get it somewhere, you know, $103,000 or cheaper. So that’s why, you know, if somebody pitches to me like a deal like this to me and they say I want $98,000, I’m gonna be instantly very interested, because I know that I can probably make this guy work. You. So I want to check it out. I actually got my rehab budget closer to $40,000, right? So $40,000, $190k x 0.7, $133k minus $40k gives $93k, right. $93K is closer to number. Right. But the, the cool thing about being a real estate agent, such as I am, means that I get to save a lot of money on commission selling the house. So I realize a little bit of efficiency. I can kind of take a deal that maybe somebody else can’t. So, you know, one thing that we’ve noticed lately

Is a lot of deals have been getting expensive, margins been getting thin. So if you don’t have some sort of efficiency built in, it can be hard to do some deals. So me, I’m an agent that’s in efficiency. Other people are contractors himself. That’s an efficiency because they save a lot of money. So anyway I like this deal, we put it under contract, here is a little bit of the analysis. Let’s go through it. So I’m going to focus on this video – um we’ll do a couple, couple series – this one’s gonna be more about ARV comps. So ARV means after rehab value. This is basically how we determine what we’re gonna sell it for. Right? So I have a spreadsheet here it’s pretty much already filled out. So this is the property. 810 East 33rd, 2 bed, 1 bath, 1254sqft. Alright, right. Here’s some data. I just, I didn’t fill it out. I use that for like quick approximation. So we’re gonna focus on this table right here. Here’s where I have some comparable properties that I’m using. So the first one’s 802 East 31st. Let’s take a look at that comp.

Go to East 31st, which is Paulson. Here it is. Okay. Oh, 1002 – got the wrong. Oh, oh we are starting whatever. We’ll start with this one. This is actually the second comp. We’ll start here. 1002 East 31st. This is 2 bed, 1 bath, 1,035 square feet. Let’s take a look at some pictures. Alright. This is another kind of craftsmanship style that, that porch you through there, um this one’s brick. Most of them aren’t brick. So this is a little unique. These windows look like the older style, single-pane. But I mean, curb appeal’s pretty decent, you know, good-looking house, corner lot. Okay. Here’s our backyard. I usually don’t start right with the backyard pics, but this is a pretty good-looking backyard. Right here we go. Living room. We’ve got some staging or maybe this is somebody’s furniture. Nice looking floors. Nice looking fireplace there. Okay. Yeah. This is a good, this is a good-looking house here. You don’t like the beige paint, but it looks good there. Here’s our kitchen. Hm looks pretty good. I’m not a fan of the island. That’s got linoleum, this price point. Typically you want butcher block or, or stone? Like a granite or marble, but it looks clean. Gas, stone, small kitchen, but you know, not bad. Bathroom looks good.

Seems to be a little bit small. Good-Looking bath. Good-Looking. You know, it’s good-looking house. Yep. Okay. Here’s our backyard, looks pretty big. All right. So that’s our first comp. So how do we, how do we compare this to our property? How do we do a CMA is what it’s called. So we’re here 1002. These 3 so first $206,000 is what it sold for. And it was a two bed, one bath, 1,035 square feet comes out to price per square foot of about $199. So the first thing we do is called a square foot adjustment. So our subject property 810 E 33rd, we call that the subject property, is 1,254 square feet. This comparable property, but the comp is only 1035. So we got to do a little adjustment. That adjustment ends up being $35,000. Right? So basically what we’re doing is when we do a CMA, you’re either adding or subtracting from this comparable sale. So we’re taking this $206,000, we’re adding $35,000 to it. We’re adding $35,000 because our subject property is larger, therefore more valuable than the comp anyway. Lost my train of thought.

Yeah, CMA. So square foot, the adjustment. So we’re adding that $35,000, right? If, if this comparable property would’ve happened to be larger, then we would have to subtract instead of add. So that’s what we do. So we have a square foot adjustment. So we take that $206k, we add $35,000 to it. And we end up raising the value of the house, but we have some more adjustments to do. So for, we have I said, Hey, comparable property is brick. It’s got a nice porch. It’s got more curb peel, right? We look at the difference between this property and this property, right? Even we’re gonna screw this up. We’re gonna make it look better, but it’s not gonna look that good. So little adjustment, right? We subtracted $10,000. How do I know $10,000? I don’t know, man. It’s just, it’s just what I think it is. Right?

This, this is always part science, part art. When you look at something like this, there’s no way to really quantify a house is not a stock or a house is not a hundred unit multifamily property. You value just off the numbers, you value these things, partly off the numbers and partly off how it feels. I don’t know, hard to explain. So that’s why, you know, experience, you know, you, you, you can make up for lack of experience in certain ways. And, and even I am not super experienced by any means. So $10,000 is what we give to that. So yard. So the yard, why do I have a $12,000 judgment for the yard? And that’s a negative $12,000. That negative means that the comparable property, this one at, at 31st street, right? That means that this property is better. And this one, we have a negative adjustment. Why? But you can’t see it from Google earth, but this house here, the one that we’re gonna flip has a, basically a garage kind of like a carport with pavement. It’s not like a nice backyard. It’s paved. It would be great if you, if you’re a mechanic, you know but not if you like a backyard, so we’ve got an adjustment, right?

There’s nothing that we could do to make the backyard of this property look as good as the backyard of this property, right? This backyard – short of tearing out all that concrete, doing totally new landscaping, that costs a lot of money. It’s just gonna be cost-prohibitive. It’s not gonna be worth it. And it’s gonna add a lot of time too. And time is money. So we’re doing a $12,000 adjustment. Comparable property has the current property kitchen is not as nice as a subject property. So we’re gonna have a nice kitchen. We’re gonna have butcher block, like, we’re gonna have subway tile, new appliances, gonna be bigger. Our kitchen’s gonna be better. I’m adding $3,000. Again, that’s just kind of, you know, a number the comparable property is in a better area, right? This, this 31st street. You know, I, I just believe that block is a touch better. Generally the closer to Anderson street, you are, the better. So I assigned $5,000 of that. Cool. All right. Let’s look at 802 east 31st. Where’s this house at? That’s this one. Go to east 31st. So this is the new construction. This one just got built. 1200 square feet, 3 bed, 2 bath. Sold for $255k, was on the market for forever. Actually showed this to two different clients. And I told them I thought I was overpriced and somebody bought it.

So this is, this is a cool-looking house. I mean, it’s got curb appeal. It’s a new construction too. So it’s got a builder’s warranty. Everything in there is modern. You don’t have to worry about a lot of maintenance. Like it’s pretty cool. Doo doo doo. Good looking house. Yeah. It’s a new construction lot. Carpet in the bedrooms. That backyard is pretty decent. Okay, awesome. So part of the reason, and this comes with, you know, living in Savannah and having shown this house to two different buyers, is… Let’s go down Paulson,

Let’s go to… Here’s 31st street. So here’s a vacant lot. This is where those two houses were built. Look what’s over here. This derelict, rundown commercial building here, right. Actually happened to know that there’s some plans to renovate this within the next couple years and make this a lot nicer. But it’s not right now. So the view from your front porch over here is this nasty stuff. I mean, that, that costs money. It’s hard to quantify. What is that worth? $10,000, $15,000, who really knows? Right. So our property’s back here. It doesn’t have that right in front of it, but you are gonna drive past it to get there. So it kind of factors in a little bit.

All right. So here we go. So $255, 1200 square feet is about 50 square feet smaller. So we have a square foot adjustment about $10,000, right? You can see my formula up here just don’t even, I’m not even gonna get into it right now. All right. Comparable property was new construction. I assigned a value of $25,000. That’s just what I feel like it’s worth, $25,000. What is it worth to you to have a new construction house? It’s actually worth a lot, um because of the maintenance that goes into an old house, even a renovated house is gonna have more maintenance than new construction. New construction has a builder’s warranty. It just, it’s always a better layout. Right? This new construction has an extra bedroom, $15,000. I usually throw $15,000 per an extra bed. An extra bed is worth more. Like going from one bedroom to two bedroom, hell it’s probably worth $30k, $40,000. Going from two to three, you know, $15k. Three to four is worth a little bit less. Going from four to five is worth even less still. You know, so because you think about the utility. If you go from one bed to two bedroom, doubling your beds, two beds to three beds, you know, three beds to four beds, that that number goes down.

Extra bath, $8,000 um curb appeal of the comparable property is better – $15,000, right? I think I use the same actually. I use a little. So you see how I have a $15,000 curb appeal adjustment here versus $10,000 on that brick house? Well the new construction house looks even better than the brick house. Hence, a larger adjustment. Compared property has a decent yard, but not as nice as that first one we looked at, the brick house, had a really nice big yard, right? So this is, you see how these adjustments are a little different each time. Here we go. Compared property near a condemned property. I give that a $10,000 and that’s $10,000 plus. So we are adjusting the price up now because of that, because the property that we’re gonna flip, 810 East 33rd is surrounded by, um, pretty decent-looking properties. Awesome. Alright. 733 East Waldburg. This is an interesting property. I’m really pumped how much this property sold for. So this property, our subject property is right over here. Right, right about here. And this property on Waldburg is right here. Alight? So it’s across Henry and Anderson. Usually I won’t

Use a property that far away as a comp in Savannah. You can get away with that in the suburbs where all the houses are the same. In Savannah, you can’t, but the reason I pulled this comp is because the character of this block is very similar to the character of this block. So this is a cool house. When this one listed, it listed for $240,000, I thought they were nuts. I said, they’re never gonna get this much money. Well, they got $230,000, very surprising to me. It took them you know, over three months to do it, but they got it. But this is a really cool house. I mean, look, it just looks, I mean, that’s a good-looking house. Hardwood floors, french doors. I mean, this is a cool house. With that kitchen, we got subway tile to the ceiling, all around, steel vent hood. These things look so good. That cost them like $250, by the way, it’s super cheap. The farmhouse sink. I mean this thing’s got it all look at. I mean, this is a lot of is a lot of friggin’ subway tile. It’s good-looking the kitchen. Butcher block too. Butcher block. It looks so good. It’s cheaper than granite. You know if I’m flip- I think I might never do granite again unless it’s in a really high price point. I I think butcher block looks good as hell.

Yeah, so good-looking good-looking spot. Bathroom looks great. Look at that tub. Come on. Highlighting this is, this is a $250 vent hood. They’re highlighting it, but it looks good. I mean, nobody knows how much this stuff costs unless you flip houses. This is a new HVAC. Yard, big yard. Not landscaped. Not that good looking. Still looks better than the concrete. It’s gonna be your yard. It is what it is. All right. So 3 bed/2 bath, 1,000 square feet.

So if we go back to the spreadsheet, plug it in at $230k, 3/2, 1,000 square feet, have a huge square foot adjustment. We’re adjusting $46,000, right? For a difference of 250 square feet. Wow. So that’s a lot. So we have our other adjustments. We got our curb appeal, $15k. Honestly, I feel like that should be like $18k. It’s a good-looking house. That great kitchen, $6k, right? Our kitchen is not gonna be that good. It’s gonna be good. It’s not gonna be that good. Do the $6,000. Hell, let’s give it $8,000. New HVAC, $3,000. So the HVAC that we have is not that old. An HVAC to do a swap-out on a house this size is like $4k-$5k. So put $3k there um… Compared property, slightly better yard, $3,000

Compared property has an extra bed, $15,000; extra bath, $8,000. Right? So that takes this is, this is a cool example, right? So this one sold for $230,000. It was 1,000 square feet, 250 feet smaller, right? So we had that adjustment. We added $46,000, but all of these other ones we took away from that, we end up with $221,000 is the adjusted sale price. You know, hopefully you’re starting to catch on to how we do these comparable sale analysis. So we took a property that sold for $230,000. It was 250 square feet smaller. And by the time I made all these adjustments, I said, Hey, this property, when you make it like an apples to comparison to, to our subject property would lead us to believe that our subject property looking at just this property alone is worth $221,000. You know, that’s kind of the difference that curb appeal and an extra bedroom like bedrooms are huge. Curb appeal is huge. Kitchens, you know, all that. So 705 East Duffy. That’s the last one we’ll look at. We’re gonna look at at least three properties when you do these. Of course, you know, the more you do the better, but, but four is perfectly fine. So this one on Duffy sold not too long ago,

We’re totally in the wrong. Here we go. This is it.

Come on

705 east Duffy two beds, one bath. So it’s good. I, I wanted to pull another two bedroom comp 832 square feet, so a lot smaller. This curb appeal. And this is just final sliding this curb appeal’s not great. It’s still better than, than ours. Ours doesn’t have a lot. Alright. This is like a standard house, LVP floors. This is the vinyl plank. Great walls. I mean, this is a standard, very standard flip. It’s got granite countertops. I wouldn’t have done granite, but whatever. Nice back splash. It’s a good-looking house. Separate laundry. This little bathroom. Yep, yep. Looks good. Okay. Backyard looks big, better backyard than ours. Wish I could show you. I should’ve got a picture of that backyard. Okay. So we got a feel for that one. Here we go. We plug it in. So $164,000, 2 bed, one bath, 832 square feet price for square foot, 197. So we do that adjustment. We’ll add $55k, right? $55K is the price.

We do some other adjustments. I said comparable property was in a better area. I like Duffy. It’s a good street. Curb appeal, not as big of an adjustment as some of the other ones. You know, that one on Waldburg was an $18,000 adjustment. This one’s only $6k, right? Why? Because the Waldburg house looked great. This house looks like just another regular house. Then we had a yard adjustment, right? So that comes out to $199k. So if we average everything out, right, this is our rehab value outputs, right? So if we average everything out, we get a CMA of $211,000, $211k. So what I did, you see my opinion here, $190k, anytime you see a blue cell, that means that it’s something that I’m filling out myself, right? So I filled out $190k. Why, why did I take $20k off this? Right. Why go through all the trouble of doing this analysis, just to take $20k off? And just to basically, I basically just threw it away. I was like, alright, I did all this work. I did all this research. But screw it because I’m right and it’s wrong. Well, first of all, we wanna be conservative in our assumptions. So you know, conservative assumption is – my, my light’s running out here, it’s getting very dark, so I’m gonna plug this thing in – a conservative assumption, you know, is basically when we’re looking at any deal, you wanna, you kind of wanna make sure you’re gonna make money.

I mean, that’s important. So you give yourself, you know, in the, in the engineering world, we call it a factor of safety. And a factor of safety basically says, Hey, you know, just in case I screwed this thing up, which I could I’m building in a little safety zone just in case. Sorry guys, hang on, can’t stop the show. There we go. Alright. So you’re building in a little, little cushion, little buffer. The other reason why is, I just, you kind of get an intuition, you know, once you do a certain amount of deals that no matter what the numbers are telling you they just don’t feel right. So we’re gonna use $190,000 when we do all the underwriting of this deal. Now bear in mind. When, when I go to list it, I’m probably gonna list it at $199k. Typically when it goes to listing a property for sale,

You don’t, you don’t really want to shoot for the stars, especially if you’re flipper. If you’re a flipper, the name of the game is doing the work quickly, listing it quickly, selling it quickly, so you can get your cash back and you can do another deal. It’s about volume. If you list too high, you end up stagnating that listing and, and that’s not good to do. So I’m definitely like I’m not gonna list this thing for $220,000, you know, for sure. $210K, maybe, you know, one of the things that, that I always do is I do my underwriting. Right. But I don’t lock myself in because the markets change. Somebody could list a house next door for $230,000. Right. And that’s gonna change the calculus. Right. So we’re, we’re sticking with $190k. I’m probably gonna list it at $199k. That’d be great if I get it, but you know, $190k, all right. $190K. That’s how we do a comparable sales analysis. So the next one we’ll go over rehab budgets. We’ll talk about soft costs, right? Including your taxes and appraisals and lender fees and all that stuff. But for right now, the part of these spreadsheets that we filled out, $98,000 purchase price. Right. And we know that our ARV is gonna be $190,000. We’ll take a look at the rest after we, we get some pictures of the property. Take care.
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