Analyzing A Deal-Am I doing this right?

[Savannah King]

Hello,

I have a question and would greatly appreciate any feed back I can get.

So I went to see a property about a deal where the seller is requesting 55K for property.

He buys and flips as well and he completely renovated the property from the inside out, when I check Zillow or Realtor.com  they say the property is worth  around 65K give or take depending on the site.

I have been trying to figure out how much I would be able to pitch a sales price to an end buyer for (this would be my first deal-if I can get it right)

I located properties that have recently sold in that area so I determined ARV of 46650 ...

I took that number to determine my offer and calculated

.65 x 46650 =30322.50 (didn't subtract repairs as seller stated everything was up to date)

but is that the correct formula to use to figure out how much property could sell for? Because in that case, there's no deal here and its not worth trying to move forward with.

Again, any feed back I can get is much appreciated.

Thanks in advance :)

[Kevin C.]

If you are using wholesaling as a strategy, this is definitely not a deal. You would usually use wholesaling as a means with distressed property, motivated sellers, or highly discounted property's. If he completely renovated it out, he would be selling a turnkey property (to a rental investor) or a dwelling home (to a retail buyer). 

Also since he renovated it out, it is already at ARV, so you can't really ask for him to be selling at a discount. The formula using .65 is showing the price at which (35%) equity would be taken out, in order for fixers/flippers to pull profit from.

If your end goal is to get the 10k difference from your projected ARV comps, I would go over the motion and figure out the COC return/ cash flow of the property. But even then if it profits enough, I would just keep the property for my portfolio.

Overall, there isn't a lot of profit to be made in this deal. He should just sell it retail value, which he seemingly is but that is just speculation.