 So, today I'm going to take you on a journey inside of my next flip. We're going to go over the numbers here together. I'm going to compare and contrast the different ways you can buy, right? The different equations you can use, share with you what my equation is, how do I break down the numbers before we buy it to show the profit and holding costs and all that stuff. And then, we're going to take you to the property so you can walk through it, right? I'm going to show you exactly what $40,000 will get you. This is going to be a 3,000 square foot renovation. This is probably the biggest house, matter of fact, this is the biggest house I've ever done. So, it's over 3,000 square foot house, but it doesn't need a lot of work, which is what enticed me to do this deal. So, let's go over the numbers, then go to the house. Let's do it. Today's video is brought to you by PropStream. PropStream is the real estate software we're all using to access big data. 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Greetings class, this is Chris Haskins with therealestateroundup.com. My mission and ministry is to raise your financial literacy through real estate investing and entrepreneurship. In doing that, I hope to show you how the numbers work. My equation, the other equations that are out there that people are using to borrow hard money. I want you to be aware, fully informed when you go out there to make an offer on your next investment property. Now, the key to this training, and I need you to make sure you get this 100% clear, okay, Roundup? You can't use all equations for all price houses. Let me repeat that. A lot of us investors, right? We start out with the ARV, maximum allowable offer equals ARV times 0.7 minus repairs, right? That's generally speaking what we do with Mayo, right? Or you can do 0.65. A lot of people do that. A lot of hard money lenders do that too. But when you start getting up into the two, three, four, $500,000 houses and beyond, you won't be able to use this equation and I'm gonna show you why today. So before we go to the property, you're gonna love this one. Five bedroom, three bathroom, no. Three and a half, one, two, three. Three and a half bathrooms, great room with tearing down some walls, it's gonna be cool. Make sure you subscribe so you can see as this house comes together. But this is the first week, right? Five bedroom, three and a half bathroom, 3,000 square foot house, it's gonna be nice. So here's my equation, hard money lender equation. My equation, hard money lender equation. Now, when you get to the two, three, four, 500s and beyond, this 0.7 is not gonna work. So let me show you how we break it down so I can make sure that my offer is reasonable, right? You can't go in there offering somebody $150,000 on a $310,000 house that doesn't need that much work. It's just not gonna work. You gotta be reasonable in the real estate business, right? So the ARV on both sides, this is gonna be my side, hard money side, this is the general equation. It kind of accepted by the general population when it comes to making offers. So we got ARV is 310, right? 310, my partner, Ron, he thinks this thing is worth a little bit more, but we shall see as we get closer to the end of the project. We're during the pandemic right in the middle of it. Real estate's still booming. So I wanna make sure that you get out there, round up. Don't be scared to get into the real estate business. People are still buying houses even more today because interest rates are so low, okay? ARV 310, Reno, which we will be walking through very shortly, $40,000, right? I personally think it's gonna be closer to 50, but Ron says 40. Let me tell you why I work with business people that have relationships. My business partner, Ron, he has relationships with other contractors that work for major apartment complexes. So we can get them after hours to do work for a reasonably priced, a reasonable price, right? So your relationships are everything in this business. Reno's 40, I can't change the Reno, right? On 40, that's just what it's gonna be. Holding costs, cost of sale. Usually I average about 10 or 11%. I just made it 30, 31,000 on both sides. Cost of sale, 31,000. These numbers here on my equation or the hard money side, not gonna change. Now don't forget, hard money is nothing but a lender that's gonna loan you the money based on the asset and not necessarily your ability to pay it back, all right? So where do things start to change? Where do things start to change when it comes down to the equation, okay? So my male maximum allowable offer goes like this. 310K, which is ARV, minus Reno, 40,000. We went over that there. Minus cost of sale, holding costs, 31,000. Now here's where we change, minus profit. I wanna make about, if I'm gonna have 250,000 out because it's costing me 40 for the Reno, right? If I'm gonna have 240,000 out, I wanna make at least 40,000, right? 35 to 40, right? Then that's not, it may seem like a lot of money when you calculate it, break it down into a six month deal. You're talking about $5,000 a month, 5,000, 6,000, that's not major money. That is an ordinary income in America. So back all this stuff out, our maximum allowable offer equals 199,000, AKA I'm just gonna call it 200,000, which is what we bought it for, okay? So keep that in mind. So let me go over that again. Mayo, this is our ARV, minus repairs, minus cost of sale, holding costs, minus my profit. And I would recommend you to put your profit first. Profit first, gotta take care of yourself, right? That's gonna be right around 200,000. So we made this offer for 200, right? So let me go over here. The reason this is so important roundup, Chris, why do I care about different equations? Because if you're using the 0.7, 0.65, you cannot compete with a guy that can make 40,000 and get in and out of the deal. Let me share with you. So here's the hard money equation, right? Mayo, I can't change the Mayo, right? That's 310. Now the equation is times 70%, right? 70%, that's gonna bring us down to 217,000, okay? They still have, now, okay, the 7%, I'm glad you asked, that's gonna include your holding cost, closing cost, realtor fees, the buyer's closing cost, maintenance, utilities, all that stuff which I calculate right here. I put it in here, it calculates roughly the same thing, right? All that closing cost and all that stuff, holding cost. So that's gonna calculate, that gives you all that wrapped up in that 0.7. Now where the numbers start to get skewed is when you back out of this equation here, your reno, okay, your reno. You still gotta back out your renovations, right? So we got 310 ARV times 0.7 is 217,000 minus repairs. Your Mayo is 177, let's round it up to 180. And remember, some guys are using 0.65 right here, okay? I know I do, 0.65, I have. So your Mayo down here is 177 for the hard money side and you probably won't be able to change that if you're borrowing hard money, okay? But if you're a cash guy using private money, like we do, we bring a lot of cash nowadays, our offer is $20,000 plus more than the hard money offer, okay? So who's gonna win this bid? Who's gonna win roundup? It's no question. Why would someone sell a property for $20,000 plus cheaper when they can get 200, right? So these are just all numbers in real estate are approximate. I remember I had to turn down a guy one time he wanted to do business with me, he wanted to invest with me. He wanted to know every dollar, every expense down to the penny. How much you selling it for? Renovations, how much is it? Two by four, tile, floor tile, windows. I'm like, you know what? I don't have time, I can't do this. In real estate, the numbers are so big, right? You gotta remember this. We don't even worry about down to the dollar or to the penny. We calculate these things down to the thousand, right? So it's either gonna be 40, 45, 47. Either way, the numbers are big, right? So I had to turn this one particular investor down. Mainly because I just don't have time and it doesn't make sense to crunch all these numbers down to the dollar. So I don't want you to do that too. You're gonna waste a lot of time doing that. Okay, so you got my equation, right? We pay 200,000 for this house. Keep in mind, as you get bigger numbers, this is gonna be way off, right? I mean, just imagine the $400,000 house times 0.7. I don't know what it is, but it's super low, right? And you just, those numbers, they just won't work, all right? So when you make an offer, when you make an offer, just remember your profit, holding costs, renovation. Those are the three. Renovation, holding costs slash closing costs, profit. If you can remember those, you can get your offer. Get it in there. So let's go over to this house. I'm gonna walk you through it. Man, this is a sweet one. First time I don't have to do a renovation to a bathroom. They already did the renovation to the bathroom. You are going to love this. And we're not calling it master bedroom, master bathroom anymore. So it's gonna be the primary bathroom, primary bedroom. That's something that's new. Come down the pipeline. So let's go look at this property. And don't forget to take a second to subscribe to my channel, like this content, share with any other real estate investors that are getting in the business that need to know this stuff. Thank you for letting me serve you roundup. I love you. Let's roll. Okay, so we're here at the house. Thank you for joining us over here. First thing I wanna do is point out to the neighborhood. Roundup, whenever you're in the neighborhood, home vests just taught me. You have to look at the, not only your subject house, right? But you also have to look at the five or six houses down. So if you see here, we have pride of ownership. Everybody's cutting their grass, across the street. Got a few bushes over there. Not too pretty, but it looks like to me, as you're paying down Ron, we've got pride of ownership in this neighborhood. What would you say about that, Ron? You know, houses looks good. So this is what attracted me when Ron brought me over here. I was nervous about the area. It's a rough street over a little bit, but when you come in here, you feel like home, feels like home. So if you see here, we got a new roof and we will have to do the windows. How many windows we got in here, Ron? Thanks for shooting this one, brother Ron. I got my camera on, I don't got a screen. I mean, I got my mic on. Hey, Baba. I'm gonna shoot her. Trying to tease the kids young. 22 windows, Ron. So how much in windows do we have on this job? 16 windows. That's per the window and how much to put them in? 300 on the window. This here needs to be pressure wash. Ron, do you think we're gonna be able to keep this siding? Soft wash. Are we doing anything here? We're just gonna keep it like this. Oh shoot, we can't go this way. We're just gonna, I mean, are you adding anything here or just gonna clean it up? That's a small thing. That's a few dollars, right? So I'm gonna finish taking you around. I'm gonna take you around the exterior and then we'll go inside to take a look. So we got windows here. This seems to me to be an addition as we come over here. Hey Baba, you gonna walk with us or no? Hey, are we going to the pool today, Baba? So we've got the two-car garage, very nice. We're going through there. I can't get to the deck, Ron, so I gotta come this way. So are we thinking we're gonna keep this since we're here to get in there? Oh yeah, if you don't mind. Gotta be cognizant of the, it kind of comes out shaky a little bit. You think we can keep this, Ron, or you think we gotta let it go? So R-22 is the old Freon. Home inspector probably gonna ask us. So this deck here, luckily we have a new roof. This deck, or you think we're gonna have to replace the whole deck, brother, Ron? So we're gonna start off by demoing the bad sections and then we'll see once we- Demo the bad sections. Yeah, bad sections, let's see where we are. So we're gonna- We're almost as save as much as possible. Okay, our goal here is to save as much as possible. However, depending on how bad it is when we start un-pilling back the onion, we have to delete it all. So we're looking at what, three grand at the most, 3,500? How about that? Sounds good. Is that the garage? No, that's the dynamo. Game. Oh, that's right. Wait till you see this bath, this primary bathroom round up. You are in for a treat. This is probably the baddest bathroom I've ever seen in a flip. What about you, Ron? Heck no, I'm never in that good of condition. So this is the side, this is the little addition they put on here. Very nice, no work here. If you see under here is all of them. This has all been buttoned up. Nothing to be done. Everything looks good. Air conditions hitting. Yeah, that old Freon. So this is going to be your great room where everybody's going to hang out. Or will we be replacing the fans, Ron, or keeping them? I wouldn't say keeping them. I would too. Yeah, that's right. Man, shoot, keep them. Never have we been able to keep fans before. This is going to be our utility room. We've got a washing dryer hookup here. We don't have anything in here, right? Other than paint? This paint. Very nice. We put new cans in there. We got to just paint this and it's over. Let's go to the master before we get to that kitchen. So this flooring in here, we might, we definitely, go ahead, Ron. Cover it up. Cover it up, okay. We're going to keep all this flooring, right? Yes. Look at this roundup. Flooring, good to go, just dirty. Unbelievable. Unbelievable. This is your master suite. Look at the ceiling, the fans good, Ron. You keep that too? Yup, fans good. You gotcha. Everything. Everything in here. Yup. We've got a master primary closet. So this is going to be the primary bathroom. It looks a little nasty now, just because they took that drought, that wallpaper. Man, shoot. So we just sand it down a little bit and paint over it. You think I'll try to take it off? I'll give my show over there. Really? Yeah. At the end of the day, worst case, we'll have to do that. I'll put some wanes coating over it, or you think we will be able to take it off? We can take it off. Just get rid of it. For the shower here, check this out. I mean, this is just floor, the tile here, whoever did this little phenomenal job. Tile up to the ceiling. Got new fixtures in here. I'll let you go and show them that. New fixtures, new hardware, new trim, everything. Another shower here, new tile. So we're gonna have the toilet in there. Y'all can see that. There you go. I like the fact that the toilet has its own door. You can stank it up and keep moving. What, we keeping this vanity run? I think you want to put a grand thing in there. Oh yeah, we're gonna swap the tops out. Yeah, we're gonna put a grand thing in the white one so it's placed on top. Let's do it, let's do it. We, I'm listening, Bubba. Tila, y'all switch out the chair. Let Bubba have the chair down, please. We got another closet here. Oh, this is his closet. We ain't got none anyway. All right, so the floor here. Boom, boom, boom. This is Bubba. Tila, let Bubba have the chair for a minute. Little office space, right? Nothing too important. Okay, here we go, the Mac Daddy. Now I'm gonna show you some before and afters on this thing, right? Cause we are, I didn't even, they started, when I started so quick, I wasn't even able to let Tila, let her have the seat for a minute. I wasn't even able, kids, kids, trying to teach them young. We'll show you before and after. Let's swap that, you'll see that picture. So what we got to know here, Ron? What we're gonna do? Do you know yet? Granted everywhere, with the top. Other than closing this in? Got you. We're definitely gonna close this up, right? Close this up, we'll do a configuration here. This wall's coming out here. We get a bar here. We're gonna see this thing is gonna be nice and big. Oh man, it's gonna be, this is gonna be the, when they walk in, it's gonna feel huge. I'm gonna take away some of that pantry, but it's just. Oh, for the refrigerator? Yeah, but we'll see how the layout comes out. Yeah, that's gonna be a rough one, taking that pantry out. All this stuff here, we get new flooring from the tile, into from the kitchen, into here, Ron? Yes. Got you, all right. So this is kind of like a play area for the kids. Oh yeah, you want to give them that bathroom there? Forgot to cover the bathroom. This one, get what? New top? New top. Keep that. Try to stay in the van. Keep the vanity. Move forward. Move all that tile up, it's gonna look brand new. New toilet, it'll keep the toilet. It's all that thing. Good to go. This is just a den. In here, all we're gonna do is just replace this ceiling and sand these floors, and we're done. I love it when you don't have a lot of work to do inside of a room. These floors, luckily, under this linoleum here, under this linoleum was hardwoods. Look at that. I mean, hardwood floors, they're older than Ron and I probably put together, and they will last probably until we're gone off planet Earth. Hardwood floors last forever. The day we came from there. Let's do it. That door gets replaced, too. That's a big old house, man. It's a big boy. Thank you. This is gonna be our communal bathroom here where Ron says that we're gonna demo all this tile. You wanna give him a pan? We'll show you the before. You can just paint it from out there. So all this tile goes. New sheet rock here. And then new tile surround over the tub. You gonna do something sexy in there, Ron? This over here. We'll keep it a tub. I'm sorry. Keep the tub, turn it white. Blue tub, yikes. New flooring, and that's it. New vanity, simple. So right now, we're at what? 40,000? Yeah, 40,000. So this is like another primary bedroom. So it's not as big as the one downstairs. This place actually has two primary bedrooms because you have a bathroom in each room, right? But this has the closet in it that isn't as big. Is this? Oh, shoot, okay. You can roll, man. We're not even here. So it's gonna be a little tight for a closet space. But here is our bathroom. Then for the upstairs primary, they already busted this out. And what we'll do is we'll put, while we're sheet rockin' over this, Ron, we'll scrape it down. We're gonna try to scrape it and just smooth it out. Scrape it down, smooth it out. We're gonna put sheet rock here, smooth it out, maybe with some plaster perhaps? I don't know. Possibly. And then we're gonna tile all this around. We got lucky with this round up. If you notice, Ron, get over there. You can shoot over here. I'm sorry, you stand over there. We got lucky with this. We didn't have to take all this cement board out, right? Usually you got about three inches of cement going all the way around here. So I would say we got lucky with this. And that is that. So I guess this job is done with that, right? Yes, sir. That's it. So that's gonna be 40 plus, 40,000 plus. And this is our first week round up. So stay tuned. Make sure you subscribe. You'll see how this project comes along because this is the first week. And Ron is really kicking booty getting this thing done quickly. Man, it just feels so good. And this feels like I can already feel the flow of the room, right? All right, guys, I'll see you next time. Bye.