Wholesaler · Lawrenceville, GA · Member since 2016 · 7 posts · 6 votes
Hi Everyone:
I've recently gotten back to real estate wholesaling/investing after a long lay off. When I started back in 2003, I was trained by a very successful wholesaler team here in Atlanta to use the following formula when acquiring deals: 65% of the ARV - rehab cost - $10K (the target margin) = max offer to the seller.
Is this formula still applicable in the market today?
I watch other wholesale lists and I can't believe some of the asking prices out there. I wonder if the wholesaler is actually able to move properties that are priced outside of the aforementioned formula. If they are I also wonder how the buyer who actually takes possession of the property is actually able to make money.
Investor · Marietta, GA · Member since 2014 · 41 posts · 17 votes
9y
I think you seeing it about right. Its not a wholesalers job to make sure the flipper or landlord investor is getting a money making deal. Its the flipper or the landlords job to do that, so if there is enough interest in the market and the wholesaler can find a pool of investors willing to pay more then what you or I would - so be it. As best I can tell, that formula will do fine as a rule of thumb, and you should adjust it based on who your buyers are and what it costs you to find the deals.
Investor · Marietta, GA · Member since 2014 · 41 posts · 17 votes
9y
I think you seeing it about right. Its not a wholesalers job to make sure the flipper or landlord investor is getting a money making deal. Its the flipper or the landlords job to do that, so if there is enough interest in the market and the wholesaler can find a pool of investors willing to pay more then what you or I would - so be it. As best I can tell, that formula will do fine as a rule of thumb, and you should adjust it based on who your buyers are and what it costs you to find the deals.
Investor · The Colony, TX · Member since 2013 · 283 posts · 205 votes
9y
@Will Beatty Dallas is such a hot market right now I just take ARV-70%-rehab. I have sold the last two deals using that formula.
ARV: $100,000 X .7 = $70,000 - $20,000 = $50,000. I can sell that deal all day long for $60,000 - $62,000. But, this is a unique market and flippers are running very tight margins.
Investor · Wasilla, AK · Member since 2016 · 160 posts · 78 votes
9y
Depends on seller and how well you know your end buyers. I have investors that will buy at 92 cents. So if I go into a house with the .70 offer and they are stuck on XX dollar, I know my clients well enough that I can manipulate my offer based off who I know I now need to pitch it to. I also have a couple that don't do houses with rehabs lower than 60k because they love the game and only buy at .70 or better. Know your end buyers and come to the table with multiple exit strategies.