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Updated about 18 hours ago on . Most recent reply
Richie MartinPoster
- Investor
- Newport News VA Hampton VA Norfolk VA Portsmouth VA, Suffolk VA
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My offer - To a seller
Im a little confused on what my offer price should be after I get my ARV (Purch + Renov + Holding Cost) then X 70% = MAO
Shouldmy MAO be what I offer for the property to buy the property?
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Jaycee Greene
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- St. Louis MSA
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Jaycee Greene
#2 Classifieds Contributor
Pro Member
#2 Classifieds Contributor
- Real Estate Consultant
- St. Louis MSA
Hey @Richie Martin, welcome to the BP Forum! Nope, take the ARV and times it by 70% and THEN subtract the rehab costs. So, for a $200k ARV that needs $25k in rehab, it would be 200*0.7=140-25. So, $115k.
For the algebra nerds, it's: MAO = (0.70 * ARV) - Rehab. FYI, the holding costs are built into the 70% discount factor.