Your forumla for making an offer

[Chris T.]

I have a question for all of the wholesalers out there. I have a couple of properties I am looking at to wholesale but actually have never done a wholesale deal before. I have done plenty of reading on the topic,etc and have a general background in Real Estate.

I know from a local investor I spoke with he tries to use the formula 70% of the ARV minus the rehabbing cost as his maximum offer. So for example if a house has an ARV of 100k and needs 30k in rehab his max offer would be 40k. His formula would be 100k ARV *70% = 70k. Then you take the 70k -30k rehab=40k max offer.A couple of people have told me do not include rehab costs in my offers. Any advice is much appreciated.

What technique or formula have you guys used over the years?

[Ali Samana]

Hi Cdinero,

The 70% formula is a good one to use if you are doing rehabbing. However, that leaves you no money for your wholesale commission.

I normally work with the formula of 60%-rehab cost = Max offer. This leaves me with 5-10% for wholesale commission. It also leaves me with more money on the table if I decide to do the rehab myself.

Hope this helps. Good luck!