This equates to a lot of money.

What am I missing in this equation?

Take the money problem completely out of the equation, tie up deals for an established flipper and just paid for finding.

The part of the equation that we don't have is the terms of the mortgage, if there are not too many years left of them based upon a low interest rate and there is equity in the property then it could be attractive from the scenario you reference of owning the properties with minimal money out of your own pocket and then trying to refinance once you've owned it a year to a mortgage with longer amoritization to increase your cash flow

60-75% of market value minus repairs is not a deal to them by any stretch of the imagination unless you're adding some kind of other value to the equation for them.The value you're adding may just be getting them out of a house payment...but if they have high equity, it's not their only property, and they have only owned the property for 7 years it's unlikely they're really hurting for money.

I like Joel's take on this, by working this equation backwards you understand why banks are seeing the new construction as a riskier proposition.

It seems to me there is one extra person in the this equation....I would think if I'm paying for a lead that leads me to a deal I close, that lead should be with the actual seller and not another wholesaler if I'm doing all my own negotiations???

A waste of time; but, anything that the parties agree to be bound by, that is probably not against the law, can be included in a contract.On my side of the equation, I ask for indemnification against any and all claims from owners.Good luck.Paul

I was just looking around at CAP rate equations.

Ann Bellamy I have worked with enough different types over the years that I know there are many people that say they want to learn, work or whatever, and they never step up and take responsibility for their part of the equation and expect everyone else to carry them.