# MAXIMUM PURCHASE PRICE FORMULA

Learn How to Use the Maximum Purchase Price formula to analyze the Maximum Purchase Price you should offer for a house flip property.
Calculating the After Repair Values (comps)

## Maximum Purchase Price Formula

FAQ
What is the Maximum Purchase Price Formula?
The Maximum Purchase Price formula is used to calculate the Maximum Purchase Price you should offer for a property.  The formula uses a detailed analysis of all of the project costs including your Repair Costs, Buying Costs, Holding Costs, Selling Costs, & Financing Costs.

The Maximum Purchase Price formula is the most accurate calculation, because it requires you to think about, consider & calculate every single project cost on the project.
Maximum Purchase Price = After Repair Value - Buying Costs - Holding Costs - Selling Costs - Financing Costs - Repair Costs - Profit

### Maximum Purchase Price Example

A flipper finds a distressed property that the seller is asking \$85,000 in a neighborhood with \$200,000 resale values.  After performing a detailed analysis of all of the project costs the flipper calculates the following costs:
• Repair Costs = \$65,000
• Holding Costs = \$3,750
• Selling Costs = \$16,000
• Financing Costs = \$7,500
• Desired Profit = \$30,000
How much should the flipper offer using the MPP Formula?

Maximum Purchase Price = After Repair Value - Repair Costs - Buying Costs - Holding Costs - Selling Costs - Financing Costs - Profit

Maximum Purchase Price = \$200,000 - \$65,000 - \$2,000 - \$3,750 - \$16,000 - \$7,500 - \$30,000

Maximum Purchase Price = \$200,000 - \$94,250 - \$30,000

Maximum Purchase Price = \$75,750
In this scenario, the seller is asking for \$85,000 which is \$10,000 more than the recommended purchase price of MPP Formula.

## Deal Analysis Case Study

Learn how to Analyze a House Flip and Create a Professional Investment Report in less than 5 minutes!

In this Case Study, Dave will walk you through the analysis of an example house flipping deal and provide insight on how you can quickly analyze prospective deals in a matter of minutes.
FAQ
When should I use the Max Purchase Price Formula vs the 70% Rule Formula?
The 70% Rule Formula should be used to initially quickly analyze the validity of a deal to see if you should spend more time to fully evaluate the property using the Maximum Purchase Price formula.

If the deal meets your 70% Rule criteria, you can perform a full Maximum Purchase Price analysis to determine the actual purchase price you should offer for the property.

Take Action
Now that you know how to analyze a flip deal, start finding and analyzing deals in your marketplace. The more you practice, the better you'll get at quickly valuing potential deals.

## Tools to Analyze House Flipping Deals

If you are the old fashioned pen-and-paper type, a pen and notepad or a used napkin will work just fine...

### Good 'ole Trusty Calculator

Listen, there's no crazy calculus  involved in calculating your purchase price, so you don't need a fancy 'Scientific Calculator'....you should be able to use any ordinary calculator or phone app to calculate the MPP.