Average wholesaling markup

[Matthew Haussmann]

I am looking at a property being sold through a wholesaler. Technology being what it is, I was able to find the owner of the house and the actual contract that was signed between the owner and the wholesaler. Here is where I need some feedback. This contract is for $40,000. The wholesaler is marking it up to $65,000 (roughly a 62% markup). Is this normal? Ethical? Anywhere near decent? Any input would be appreciated.

[Scott E.]

Normal? Not entirely...

Ethical? Yes, they're entitled to price it wherever they'd like.

I would say an average markup that I've seen in my market is ~$5,000, but I do get deals from some that try to milk the profits and squeeze $15k+. Unfortunately in doing so, these guys are pricing me out and we don't ever end up doing business.

For me as a rehabber, I reallly don't care how much they are making on the deal, as long as the numbers make sense for me. In fact, I'd like them to make as much as possible! If they can make $25k, and there is still room for me to make another $25k, that's fantastic! That just means that they have more money to put towards marketing and working on bringing me more deals.

When a deal comes to me as a rehabber, I'm just looking at one thing number wise: Does the offered price = 70% ARV - Repairs? If yes, I'm taking a closer look.