70% VS 65%

[Nicholas Renshaw]

Hey BP! Nick here with another question, this time regarding profit for the wholesaler. I have heard from many investors about using the formula ARV X .70 - rehab cost - desired profit = MAO. But just a few moments ago I heard of someone else using separate formulas together for the buyer purchase price and the wholesaler purchase. Those went as follows: Buyer formula: ARV X .70 - rehab cost = buyers purchase price Wholesaler formula: ARV X .65 - rehab cost = MAO Now where the profit comes from is the difference between the buyers purchase price and the MAO. My question is which one is better to use? The first formula using only the .70 or the second set of formulas using both .70 and .65? Or is it all just preference? Thanks, Nick

[Aaron Mazzrillo]

Your post is like geometry...

Here is a rule of thumb that works for me. Buy as cheap as possible and sell as high as possible.

Rules of thumb are about as useful as rulers - as long as your thumb. Not much you can measure with that. It's like saying investing in Detroit is a bad idea. OK, that might actually be true. Never mind on that one.

Not every buyer will pay the same price for a house. If that were the case, trustee sales would be a a disaster!

Buy as cheap as possible and look for the buyer's who pay the most. They are out there. This past June I made a $5K wholesale fee off a $430K house that had a $430K loan on it. There are no rules to this game except those put down by our crimin... I mean fine friends in guberment.