A couple of months ago I started doing Deal Analyses on investment properties here in Denver, focusing on rental properties. After talking to friends who were also investing in Denver real estate, I decided to bring some of them on the show to do deal analyses on the deals they were working on.
My guest for this episode is Derek Marlin who does fix and flips. This will be the first in a four-part series with Derek talking about deals he’s doing as well as deals he’s not doing.
This deal analysis examines a wholesale deal in Longmont that involved a significant full house gut, reconfiguration, and rehab. Derek was contacted by a prospective client about a Partnership Flip. In a Partnership Flip scenario, a client brings the deal, and Derek determines the current value or "as-is” price. Elevation funds the rehab, manages the contractors, and handles all details. The client and Elevation do a 50% / 50% revenue split.
Whether it's a deal or no deal, they are both great learning experiences.
- Listen to the podcast "#176: Deal or No Deal? - Flipping in Longmont" on the Denver Real Estate Investing Podcast
- Watch the YouTube video (at the bottom.)
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
Client Deal Analysis
Derek's client found this potential property and sent Derek his analysis:
- KEY STATS
- $315,000 purchase
- $95,000 rehab
- $525,000 ARV
- Wholesale sourced
- 10 Day close
- $5k hard earnest
- No sewer scope
- Comps
- 4 deals $453k-$590k
- 11 months to 1 month
- Top two comps:
- $510k & $590k
- 4/2 and 3/4 layouts
- Projected Profit
- $55,081
The spreadsheet screenshots below are from Derek's Flip Deal Analyzer spreadsheet (free download.)
Elevation Deal Analysis
After Derek received the client's analysis, he did his own analysis:
- KEY STATS
- $315,000 purchase
- $10k,000 rehab
- $10,500 contingency
- $500,000 ARV (Max)
- Rehab Takeaways
- 100+ year old home
- Every major system shot
- Asbestos
- Permits needed
- Sales Analysis
- November listing date
- 3/2 layout not likely
- COVID risk/reward
- Comps
- 5 deals $300k-$453k
- One common property
- Projected Profit
- $5k LOSS BEST CASE
Outcome: No Deal!
Based on the numbers and the results, this is no-deal! Onto the next one.
Flipping Academy
Elevation is hosting a 2-day Flipping Academy in Denver on July 23 and 24, 2020 and limiting the size to 12-15 participants. Denver Investment Real Estate followers can use the promo code DIRE to get bonus one-on-one flipping consulting hours.
Connect with Derek or get more information on the next 2 day academy in Denver on July 23 and 24, 2020.
If you have a property you would like to run by Derek for a partnership flip, reach out.
YouTube Video: Flip Deal Analysis - Longmont
Podcast: Play in new window | Download (Duration: 40:22 — 46.2MB)
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