Holding Costs

[Brennan Lytle]

Hello! I was wondering if there is a rule of thumb for a percentage of ARV that goes into fixed costs. Thanks

[Art G.]

Any time @Kedrick Thornton !! I have become way more technical in my in depth costs eval since this post. @Brennan Lytle the answer to your question is 10% of the ARV would go towards holding costs for the rehabber (not including the interest on a loan, rehab, or purchase costs). I went through and ran tight numbers on 3 deals, the answers were 10.9%, 9.9% & 10.3% so I would say 10% is a fair number to go with. Also I ran the numbers with the 80%ARV projections and they were about 1% less. Here is a break down for a deal of mine with an ARV of $322,599. [Overview of deal Close to Close 135 days. Rehab $40k. Purchase price of 185,819.30]

Holding & Closing

Wholesale fee= $13,677.97; Property Taxes= $756; Utilities & Insurance= $1,052.43; Real Estate Agent Commissions 5%= $16,129.95; Title & Escrow Closing Costs= $3,548.59

Grand Total of Above= $35,164.94

Percentage of ARV= 10.9% on a 70%ARV less Rehab deal.

Investment Profits= $61,614.75

Total Cash out of Pocket= $240,549.70 and ROI of 25.61%

Good luck gents!