How do I know when I have a worthwhile deal?

[Terrance Merck]

Situation- I am currently looking at a two bed 1 bath that is in pretty good condition. As of 2013 it was valued at $28000. In 2012 it was valued at $50000. I was looking at this property for wholesale purpose. I am not sure if there is a deal here and would like to know what others think and if is so how should I approach.

I haven't contacted the seller. Just gathering Intel and trying to weed out before moving forward.

All perspectives are welcome,

Thanks in advance

[Jon Holdman]

You need to figure out what it would be worth now if it was fixed up.  And what it will cost to fix up.  Then you can back into a price you could get when selling to an investor. 

The usual rule of thumb for rehabbing is that purchase plus rehab has to be under 70% of ARV (i.e., the eventual selling price after its rehabbed). So, once you figure out ARV, take 70% of that, subtract the cost of the rehab and your fee and that's what you can get it under contract for.

In many areas its nearly impossible to find such a deal.  So, some rehabbers will go to a higher percentage.  If they have their own cash, they might get away with a deal as high as 80%.  But the higher percentage you go to the fewer buyers will think that's a deal.

The key numbers here are ARV and the rehab cost. Its not easy to come up with either of those numbers. It takes experience and knowledge.