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Updated over 10 years ago, 04/10/2014
Buy and Hold Profit Margin
I was wondering if anyone can tell me how I should be thinking in terms of doing calculations on trying to make an offer on a wholesale deal for a potential buy and hold investor vs. a fix and flip investor. I know on fix and flip the general consensus is ARV minus @ least 30% profit margin to start (I already know about the other subtractions) but in a buy and hold scenario I need to also consider what the rents will be. Is there a formula I can use to determine how the ARV translates to rents (like if the house is worth X amount of dollars ARV it should generate X amount of rents)? Also when dealing with buy and hold investors do I still need to subtract the 30% off the top from ARV or is that a little more flexible since they will not be selling the property right away?