Here’s what you need to understand about the underwriting process.

What does underwriting a property mean? It means ensuring it aligns with your criteria and assessing its profitability.

To delve into more detail, we have four primary aspects to consider. The first is whether it fits your buy box, which we covered in our previous video. This includes factors such as location, price range, and renovation requirements.

The second step is determining the after repair value (ARV). This involves estimating the projected sales price of your property after completing the remodel or addition. It's crucial to consider market trends during this assessment, as they can impact your potential profit.

“Underwriting is made up of four essential parts.”

Moving on to the third aspect, we need to create a comprehensive budget. This includes the construction budget for remodeling and additions, as well as holding costs like financing, utilities, insurance, selling expenses, and potential seller contributions to buyer closing costs.

Lastly, we bring it all together in step four: doing the math. This process involves combining all the elements and assessing whether the project aligns with your investment goals. It's important to stay focused and remember that not every project will be the perfect fit.

If you have questions about this topic or anything else, please call or email us. We are always willing to help!