Struggling on an offer Price

[Robert Treakle]

Hello,

I am a new wholesaler. I am working on a deal to offer an out of state owner. The property is a 720 sqft one bed one bath condo south of Boston. I estimate about 10k in repairs, mostly aesthetic. My comps place the ARV at $172000. I will take a 2500 dollar profit and I am estimating the closing costs at $5000. What sort of profit would a fix and flipper look for in this type of project? I estimated 10k however this is only a 6% profit and according to my research, most look for over 10%. I am struggling to find a good price that the owner will accept and that I could turn around and sell to someone with relative ease. Right now the price that I am calculating is $141000.

[Adrienne Bryson]

In general the formula used is:

(ARV x 70%) - repairs - wholesale fee = MAO

So in this case it would be

(172000 x .70) - 15000 - 2500 = 102900

So the absolute highest you could safely offer is $102,900.

Some notes I'd offer to you being new... Double triple quadruple check your numbers. How are you finding comps/determining ARV? How are you estimating rehab costs? How are you estimating closing costs? Are you going to take holding costs into consideration? Is there enough equity in the condo for a wholesale deal to be feasible? What is the market like for condos (particularly 1bd/1ba condos) in the area?

If push comes to shove, consider reaching out to more experienced local wholesalers that can walk you through the deal and help you avoid major mistakes.