In this video—part two of two—see how use the MAO calculator worksheet in the calculator. See how the MAO is calculated following the fixed costs method.
- [Instructor] Hey in the last lecture we looked … at the 70 percent calculation, 70 percent rule … and how we arrive at the MAO. … In this lecture we're going to look at the other side here … the other option which is the fixed cost. … Now the only difference is instead of just using the 70 … percent and assuming things with these holding cost … the buyer the flip buyer 30 percent of the ARV, … we're actually going to calculate (mumbles). … So these are some common fixed costs that are incurred … by a flip investor or rehabor so if here are the costs, … if you know these really well which if you work with a lot … of buyers in your market, especially if you rehab … in that market you should be able to have very accurate … numbers for these for the size of the deal, the type … of the property in that particular market that you're in. … So there's some extra slots here that you can use to account … for that. … So let's say for this example the fixed costs were 20,000. … So the way the MAO using the fixed cost calculation will …
- Name the formula used to calculate the MAO from the AVR.
- Summarize the 70% rule.
- Differentiate between the rehab estimator, ARV, and MAO calculator worksheets.
- Describe the factors in an AVR estimate.
- Cite the formulas that are helpful when pitching to a flip investor buyer.
- Explain the difference between recently sold comps and rental comps.