Involved In Real Estate · Fort Worth, TX · Member since 2014 · 71 posts · 3 votes
High Plains Ct. Arlington, TX 76014
ARV: $115,000
Cost: $71,000
Rehab: $21,000
Gross: $23,000
4 / 2.5 / 2 | 1633 Sq. Ft. | 1983 Build
House was originally a 3/1.5 but someone added a 4th bedroom and 2nd full bath upstairs a little while back. The whole house is in really good shape and just needs cosmetic updating throughout!
PLEASE CALL SCHYLER AT (817) 966-9444 TO SET UP A SHOWING.
Real Estate Agent · Weatherford, TX · Member since 2011 · 726 posts · 284 votes
12y
Hi there,
Can you please show us here how you arrived at the $23k gross profit? I'm not sure you're factoring holding and selling costs if these are rehab/flip numbers.
Involved In Real Estate · Fort Worth, TX · Member since 2014 · 71 posts · 3 votes
12y
Shane,
I am not factoring in holding and selling costs with a gross profit. Factoring in those costs would be the net profit of the investment. Also, because holding cost and selling costs could be different depending on funds the investor uses a long with their exit strategy.
Real Estate Agent · Weatherford, TX · Member since 2011 · 726 posts · 284 votes
12y
Hey @Schyler Witt , when wholesaling, in my opinion, you need to always present the numbers as if you are the investor, then subtract your desired fee. Investors want to see that you really understand the numbers they're trying to get. If I'm going to buy this house, here's what I want to see from wholesaler:
ARV: $110-120
Rehab: $19-23K
Cost: $65K
Ranges for ARV and Rehab make me trust you more. Unless you break down the repairs to the dollar.
How did I come up with $65K that you should tell me to pay you for it?
To get a rehab investor to buy from you, You have to think in terms of "what will a flipper pay for this house?"
I know I want to make about 15% of ARV on every flip, and I know my fixed costs are about 9% ARV, and my holding costs on a rehab of this level at this price point are probably +/- $500/month, and I'll probably hold it for 3-4 months.
So the MOST I'll pay for a property, whether it's from MLS, or a private seller, or you (a wholesaler) is:
$115K ARV - My desired profit (17,200) - Rehab (21,000) - Holding Costs (1,500) - Fixed Costs (10,350) =
$64,900 is the MOST I would pay for this property assuming your comps and rehab estimates are good.
I don't know ANY wholesaler that does what you're trying to get them to do. Every single wholesale deal I get, this is the format in which I get it. As Schyler said, every single deal structure will be different with every single investor, there is no way for them to predict your holding costs. That is your job. All I want to know are the estimated ARV, purchase price, and their estimated rehab amount. I even take my GC with me so he can give me his estimate.
He is with Networth, and they sell houses every single day with no issues, and tis is the format in which they present to their buyers.
Real Estate Agent · Weatherford, TX · Member since 2011 · 726 posts · 284 votes
12y
I'm sure they sell lots that way, and I didn't mean to imply otherwise. I completely understand the ARV, rehab, and cost as presented. I'm sure they're trying to get the maximum wholesale fee they can. And different investors have different strategies they buy with. Some can pay more of course.
It's the gross profit number that seemed out of place., and the basis of my post. It just felt like a "flip this house" profit number, not a real one. I'm sure most investors will just ignore that number and do their own due diligence... It was just my gut reaction to the number to ask.
Involved In Real Estate · Fort Worth, TX · Member since 2014 · 71 posts · 3 votes
12y
@Shane Woods Im not completely sure what you even mean. I would never present my properties how you did above with the ARV and rehab numbers. Every investor I work with knows the difference between a gross profit and a net profit but by all means run your numbers how you want, I'm not saying it doesn't work for you.