This spreadsheet is showcased for its own sake. It is wholly inadequate for serious investing. I just wanted to put some of my Real Estate theory into practice.

Note: In order for the calculations to be precise, I had to use a current date. My Pennsylvania Real Estate License expired in 2005.

Armed with my brand new Pennsylvania Real Estate License, I teamed up with an investor to dominate the Philadelphia Rundown House-Flipping market!

This is my very first spreadsheet, so I put the help right in front!

I still had all the math in my head from studying for the exam. In addition, I had a copy of some guru’s get rich quick book.

I used all of the “default”, baseline values, such as “an investor is looking for properties priced at least 30% below market value”.

I figured that, in order for us to be able to flip a property, we would have to prequalify it to ensure that it met this baseline criteria.

In the example above, the property was valued at $190,000 and that is attractive (theoretically.) In the next example, I changed the value to $130,000. The spreadsheet gives its revised opinion of the investment.

Even with custom financing (“Hard money Lender”), there is no money for the flippee.

We had access to some very detailed housing information. This enabled us to create a list of comparable sales.

Getting the spreadsheet to perform even a few HUD-1 settlement calculations was daunting.

I was pleased to get it working. (I used the HUD-1 from my own home closing to double-check the math from my Real Estate course.)

In this simplified spreadsheet, if the property pricing spread was decent enough, the potential gross profit numbers were awarded with smiley faces.

This was not just a gimmick: we spent hours entering data for different properties and, after printing the results, we needed a quick way to pick out the worthwhile properties. Using a graphic allowed for a range of acceptable figures, freeing us from splitting hairs over marginal properties. In other words, we agreed to try purchasing all of the smiley faced properties before turning our attention to the tight-lipped fellows.

In most cases, we discarded the frowners and the Jolly Rogers’. Sometimes, we considered the possibility of doing a “rehabber”, in order to put it back on the market at retail.

Now, before getting excited about happy faces in the retail section, we had to examine the net profit potential. This took the HUD-1 fees and the first year’s carrying costs into consideration (ouch!)

Notice the facial expressions between gross and net.

Also take a look at the yellow row at the bottom. This is where we can place actual offers, or try out a number that’s not already listed.

Finally, the capitalization method of valuating a property eschews comparables in favor of an investor’s potential profit from renting the property. The catch is, you have to know the “cap rate” for the neighborhood (or property type).

The worksheet allowed us to play “what if” and I applied the calculations right out of my handy-dandy Real Estate course book!