What does it mean to fix and flip real estate?
How to calculate the fix and flip value (FAFV)?
Fix and Flip Value = Purchase Price + Cost of Repairs
Example: An investor from Bali acquires an investment property that he is looking to fix and flip in Detroit, Michigan for $75,000 but the surrounding properties are valued at an average of $130,000. The property is in poor condition and will require $15,000 in rehab.
Fix and Flip Value = $90,000
Purchase Price = $75,000
Cost of Repairs = $15,000
How to calculate the after-repair value (ARV)?
After-Repair Value = Fix and Flip Value + Profit
Example: The investor from Bali finished rehabbing the property in Detroit, Michigan and is ready to sell. However, the investor discovered that the property only needed $10,000 in rehab rather than the expected $15,000. The market’s average property value is $130,000.
After-Repair Value = $130,000
Fix and Flip Value = $85,000
Profit = $45,00
Profit = $45,00
Average Value = $130,000
Fix and Flip Value = $85,000
Fix and Flip Value = $85,000
Purchase Price = $75,000
Cost of Repairs = $10,000