Repair Cost help!

[Travis Newton]

My question is this, I’ve been wholesaling for about 6 weeks now I’ve had 3 deals come and they all fell through for a variety of reasons. Well I now have a fourth deal and would like to finally cross the finish line. The issue that I’m having is estimating repair costs, the house is in rough shape and its in a somewhat bad area.
Repairs:
1. Needs a hot water heater
2. Needs an A/C unit (I’m in TX)
3. All the wiring was stripped out so it needs new wiring throughout the house
4. Paint
5. Landscaping (minor)
6. drywall/walls where the wiring was stripped (so every room of the house)
7. Needs a kitchen sink

The ARV is 69,500 I would like 6K off of this deal, since I’m splitting the assignment fee with another wholesaler that has the buyer ready to go.

ARV*65% - assignement($6000)- repairs(which I have no clue what they should be)= Offer to seller

When I talked to the seller initally she said the lowest she could go would be 35K, but after seeing the house that number has to drop.

thanks for the help guys!

[Will Barnard]

Problem one is in order to be a successful wholesaler, you must learn how to price out rehab accurately. Second, you need to leave the majority of te profit on the table for the investor taking the largest risk and your $6k (split or not) is too high for this home. Generally speaking, you should expect anywhere between 10% and 20% of the equity you are providing and in this case, $69.5k ARV less your max offer of $32k, less $6k fee, less $10k rehab = a $21.5K margin. At the full 20%, your fee should not be more than $4300 and for such a small profit margin, should be closer to the 12% mark.

Best way to learn how to evaluate rehab costs is to get out to home depot and Lowes and price everything. Walk through many REO homes and practice and get some real bids from contractors to see how close you come.