I found a deal...now what?

[Melvin J. Joseph]

So I was doing some house hunting with a friend for some experience and came across a distressed property on market. Asking price is 175 with the comps in the area at around 215. I think it has mold, needs new carpet, some bathroom remodeling and some light kitchen work. I'm thinking about making an offer for 150 and wholesaling it to someone with the resources to make a profit. Any advice on the next step?

[Mitch Messer]

Hi @Melvin J. Joseph. Hold on a minute: I don't see a deal here yet at $150K. 

Assuming your repairs are $15K (which could be waay low with the mold), the standard Maximum Allowable Offer (MAO) formula (70% * ARV - Repairs) would suggest you should offer no more than $136K.

And that's assuming you do the deal yourself. To earn a wholesale fee on this deal, you'd need to get it even cheaper!