All Forum Posts by: David Henriquez

Hello,

Generally, the formula to determine the maximum price you'll pay as a wholesaler is:

ARV x .7 - cost of repairs - expected profit = max offer price.

Example:

You know the neighborhood and pull comps to determine a house, in perfect move-in condition, is worth $100,000 but after walking through the property you determine it needs $15,000 worth of repairs to bring it to that move-in ready condition. For your effort, you expect to be paid $5,000.

$100,000 x .7 = $70,000 - $15,000 in required repairs = $55,000 - $5,000 profit = $50,000 maximum offer price.

From there you adjust as you see fit.  If you can add some profit you offer $44,000 initially then sell it to a rehabber or landlord or whoever for $55,000.

He in turn uses cash or a hard money loan to fix and flip the house. Hard money lenders will only lend at 65 or 70% of ARV as I understand so in order for your end buyer to fund the deal, he needs to acquire it at 70% of ARV or better or he won't be able to get the financing he needs. This applies to a typical wholesale deal.

Hi Nilesh,

Im not quite sure what you are asking but your profit is going to be the difference between what you contracted with the original sell, say, $50,000 in my example, and the end buyer/flipper/landlord, say, $55,000.  The 5 grand difference goes in my pocket via assignment fee.

You are probably not dealing with an investor friendly title company. Not all title company know how to work with investors.

I do a assignment of contract. My buyer always know what my fee will be when we fill out the assign contract.

Here is my process of wholesalin:g

1. put property under contract.

2. take contract to title company so they can open title.

3. assign contract to buyer for a fee and give copy of original contract with seller to buyer. Also, get some type of nonrefundable deposit($1000) from buyer so you won't get burn by buyer. This deposit will let you know if buyer is serious about buying. You would get the rest of your assignment fee at closing.

4. take assign contract and deposit to title company so new buyer and your fee will be on HUD1.

5. wait for closing to get your money.

That is how I do it.

Hope this has given you some clarity.

I'd like to echo what Thomas said above. Stop worrying and take action. I can totally attest to this. I joined the site back in October with a fire under my ***. I kept reading, reading, listening, listening, asking, etc. I tried about 10 different things which all equated to wasting my time. Here is the easiest way to get started, hands down.

1. Go to listsource

2. Buy an absentee list for your county, 70% or higher equity, absentees, complete mailing addresses. (PM if you want help with any of this)

3. Go to evoice.com and grab a voicemail number

4. Go to yellowletters.com and create a yellow letter mailing (pick one of their templates, simple is best)

5. Send your list to them

6. Research what to do next while you wait for the phone to ring

if you want something even cheaper...

1. Order some yard signs with posts online (http://www.dirtcheapsigns.com/)

2. Write

We Buy Houses

As-Is Close Fast

All Cash

###-###-####

3. Put them up in high traffic areas (freeway on/off ramps, walmart, home depot)

then do the same for local investors

Discounted Properties

All cash, fast close

Call now ###-###-####

Don't over complicate this to get leads coming in the door. You can get fancy later after you close a deal. Good luck!!!

When wholesaling I use 70% ARV minus repairs minus my wholesale fee = contract price

That's me in Florida.  I don't know what the rest of the nation is doing :)

I can't pm you because you still gotta add me rob

 Awesome!... The best way to go about it is looking online, driving through your neighborhood, talk to local agents, etc. I always look online first & look at the pictures. My goal for these properties hasn't been to find distressed properties because I love finding properties that are easy to rent as is without much or any work at all however once I start getting into flipping, I'm going to be scouring to find the worse properties hheheh :) and the best way to do that is look online, I also look at craigslist listings. Best of luck with everything.

When looking for a money partner you will want to lead with the value you will be able to ad to the transaction. Everyone needs to ad value whether it is money, knowledge, experience, credit etc...

Thanks a lot @David Light :)