What specifically makes a deal, a deal?
Good day all,
I see a lot of people using basic formulas to evaluate a deal. Example: ARV*.65%-repairs-fee. However, it seems more complicated than this. What is the investor going to be thinking when they see the house? What formula will they use. Will they include holdings costs, closing costs, and so on and so forth? Please be as specific as possible to the individual who doesn't yet know all the in between details. Thanks in advance. Rob
Hi @Robert C.
I hate to say it, but I don't think you're gonna find an answer that will fit all situations. The way I see it, a deal has to be a deal in the eye of the buyer. One person might say it's only a deal if they can rehab it and profit $40K, but someone else might be happy with $20K profit. So, what might not be a "deal" to the first buyer would be for the second. And beyond that, maybe a house that wouldn't make either rehabber happy would have sufficient cash on cash return for a buy and hold investor.
I would say that most people would be including all costs when evaluating a deal for themselves.
Go out and try to find out what the buyers in your market are looking for and then try to deliver. You might have to compromise at times on your wholesale fee if you overlook something or find they have stricter standards than you thought, but consider that an education cost.
Good luck.