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      Create a profit analysis

      Learn how to create a profit analysis in Invleo

      Here’s a step-by-step guide to creating a profit analysis. 

      Select the property record you want to analyze for profit. Once inside the property record, go to the Analysis tab and click on Profit Analyzer. This will open a form that you can fill out to perform your profit analysis.

      1. Calculate the Purchase Cost
        • Purchase Price: Enter the price you paid for the property.
        • Purchase Costs: Include any additional fees or costs incurred when purchasing the property:
          • Closing Costs: Costs related to finalizing the purchase (e.g., title fees, notary fees).
          • Additional Fees: Other fees involved in the purchase (e.g., agent fees, inspections, etc.).
          • Lender Fees: Fees charged by the lender (if applicable).
          • Home Inspection: Costs for property inspections before purchase.
          • Other Costs: Any other expenses related to purchasing the property.

            Total Purchase Costs = Sum of the above costs.
      2. Calculate the Construction Cost
        • Cost Per Square Foot: Input the cost to build or renovate the property per square foot.
        • Building Square Footage (sf): Enter the total square footage of the property.

          Total Construction Costs = Cost per square foot × Building square footage.
      3. Calculate Financing Costs
        • Loan 1:
          • Loan Amount: Amount borrowed for the property.
          • Interest Rate: Interest rate on the loan.
          • Points: Any points charged by the lender.
          • Monthly Payment: The monthly mortgage payment for Loan 1.
        • Loan 2 (if applicable):
          • Repeat the same steps for the second loan.
        • Total Loan Amount = Sum of Loan 1 and Loan 2 amounts.
        • Total Monthly Payment = Sum of monthly payments for both loans.
      4. Calculate Holding Costs
        • Holding Time: The number of months you hold the property before selling.
        • Monthly Holding Costs: Include:
            • Lender Payments: Monthly payments to the lender.
            • Property Taxes: Taxes paid on the property during the holding period.
            • HOA/Condo Fees: Fees for homeowners association or condo fees.
            • Insurance: Property insurance premiums.
            • Utilities: Cost for utilities like electricity, water, etc.
            • Other Costs: Additional holding costs.
      5. Calculate Selling Costs
        • Selling Costs: Include the following costs related to selling the property:
          • Agent Commission: Percentage or amount paid to the real estate agent for selling the property.
          • Closing Costs: Fees related to closing the sale.
          • Additional Fees: Any other fees related to the sale.
          • Home Warranty: Cost of providing a home warranty to the buyer (if applicable).
          • Staging: Cost of staging the home for sale (if applicable).
          • Other Costs: Any additional selling costs

          Total Selling Costs = Sum of all selling-related costs.
      6. Calculate the Sale Price
        • Sale Price: Estimate the sale price based on market value, the property’s condition, and comparable sales.
      7. Calculate Profit
        • Profit Formula:
          Profit = Sale Price - Total Costs

          Where Total Costs includes:
        • Purchase Costs (from Step 1)
        • Construction Costs (from Step 2)
        • Financing Costs (from Step 3)
        • Holding Costs (from Step 4)
        • Selling Costs (from Step 5)

          So, you’ll subtract all your total costs from the sale price to calculate your Profit.

       

      Example Calculation:

      1. Purchase Price: $150,000
      2. Total Purchase Costs: $5,000 (including closing costs, inspection fees, etc.)
      3. Total Construction Costs: $30,000 (assuming $50 per square foot for a 600 sq ft property)
      4. Financing Costs: Loan 1 ($100,000), Monthly Payment ($1,000); Total Loan Amount: $100,000, Total Monthly Payment: $1,000
      5. Holding Costs: $500 per month × 6 months = $3,000
      6. Selling Costs: $8,000 (agent commission, closing costs, staging, etc.)
      7. Sale Price: $200,000

      Total Costs = $5,000 (Purchase Costs) + $30,000 (Construction Costs) + $100,000 (Financing) + $3,000 (Holding Costs) + $8,000 (Selling Costs) = $146,000

      Profit = $200,000 (Sale Price) - $146,000 (Total Costs) = $54,000

      By following these steps, you can create a detailed profit analysis based on purchase, sale, and other related costs for real estate transactions.