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Updated almost 7 years ago on . Most recent reply

User Stats

73
Posts
9
Votes
Jose Falconett
  • Real Estate Agent
  • Colorado Springs
9
Votes |
73
Posts

End Investor buyer profit margin

Jose Falconett
  • Real Estate Agent
  • Colorado Springs
Posted

I have tried looking all over biggerpockets but most people are only looking to find out how much their wholesale profit should be. In my opinion, a wholesalers profit should be determined last in the MAO formula when concluding if a deal is worthy.

However, I want to know how much profit margin a wholesaler should typically leave an end investor buyer?

     Is it normal for a wholesaler to only leave this 30% difference for the Investor buyer or should wholesalers leave more. 

Is the difference sufficient enough deriving from the Maximum allowable offer for the end buyer?

I understand the 70% multiplier differs between areas but that doesn't address if the percentage is enough!

Example:    100k ARV                              For simplicity the example property is owned free & clear.

                     20k   Rehab

                     ____  Wholesale profit 

 (70% x ARV) - REHAB - wholesaler profit = Max offer

(70% x 100k) - 20k- 10k= 40k

Again is it ok to flip to end buyer at 40K in this example or is it cutting it to thin?

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