| name | financing-calculator |
| description | Calculate deal financing options and ROI projections. Use when evaluating deal viability with different financing strategies. |
Investment ROI Calculator
Model financial returns for different financing scenarios.
When to Use
- Evaluating if deal is worth pursuing
- Comparing financing options
- Modeling exit strategies
- Calculating max offer using 70% rule
The 70% Rule
Max Offer = (ARV x 0.70) - Repairs
Example:
ARV: $280,000
Repairs: $30,000
Max Offer = ($280,000 x 0.70) - $30,000
Max Offer = $196,000 - $30,000 = $166,000
Financing Scenarios
Scenario 1: All Cash
Total Investment = Purchase + Repairs + Closing (2%)
Profit = ARV - Total Investment - Selling Costs (8%)
ROI = Profit / Total Investment x 100
Example:
Purchase: $200,000
Repairs: $30,000
Closing: $4,000
Total: $234,000
ARV: $280,000
Selling costs: $22,400
Net: $257,600
Profit: $23,600
ROI: 10.1%
Scenario 2: Traditional (20% Down)
Down Payment: Purchase x 20%
Loan: Purchase x 80%
Monthly Payment: Based on rate/term
Holding Costs: Payment x months + taxes + insurance
Example (7% rate, 6 month hold):
Purchase: $200,000
Down: $40,000
Loan: $160,000
Monthly P&I: $1,065
6-month holding: $6,390
Total Cash: $40,000 + $30,000 repairs + $6,390 = $76,390
Profit: $257,600 - $200,000 - $30,000 - $6,390 = $21,210
Cash-on-Cash ROI: 27.8%
Scenario 3: Hard Money
Loan: 70% of ARV (or 90% of purchase)
Points: 2-4% of loan upfront
Rate: 12-15% annual (1-1.25% monthly)
Term: 6-12 months
Example (12% rate, 3 points, 6 months):
ARV: $280,000
Loan: $196,000 (70% ARV)
Points: $5,880 (3%)
Monthly interest: $1,960
6-month interest: $11,760
Total Cash: $5,880 points + $30,000 repairs = $35,880
Profit: $257,600 - $196,000 - $30,000 - $11,760 - $5,880 = $13,960
Cash-on-Cash ROI: 38.9%
Output Format
ROI ANALYSIS: [ADDRESS]
Purchase: $[PRICE]
Repairs: $[REPAIRS]
ARV: $[ARV]
70% Rule Max: $[MAX_OFFER]
SCENARIO 1: All Cash
Total Investment: $[TOTAL]
Profit: $[PROFIT]
ROI: [X]%
Verdict: [GOOD/MARGINAL/PASS]
SCENARIO 2: Traditional (20% down, 7%, 6 mo)
Cash Required: $[CASH]
Profit: $[PROFIT]
Cash-on-Cash ROI: [X]%
Verdict: [GOOD/MARGINAL/PASS]
SCENARIO 3: Hard Money (12%, 3 pts, 6 mo)
Cash Required: $[CASH]
Profit: $[PROFIT]
Cash-on-Cash ROI: [X]%
Verdict: [GOOD/MARGINAL/PASS]
RECOMMENDATION: [Best scenario with reasoning]
Minimum Targets
| Strategy | Min Profit | Min ROI |
|---|
| Wholesale | $15,000 | N/A |
| Flip (cash) | $40,000 | 15% |
| Flip (financed) | $30,000 | 25% CoC |
| BRRRR | $20,000 | 12% CoC |
Quick Formulas
Monthly Payment = Loan x (rate/12) / (1 - (1 + rate/12)^-term)
Holding Costs = (Mortgage + Taxes + Insurance + Utilities) x months
Selling Costs = ARV x 8% (6% agent + 2% closing)
Guidelines
- Always use conservative ARV (median of comps, not high)
- Add 20% contingency to repair estimates
- Include ALL holding costs (don't forget utilities, lawn)
- Factor 6-8 months for flips, not 3-4
- Account for market time (add 2-3 months buffer)
