How are wholesalers calculating offers these days?

[Will Beatty]

Hi Everyone:

I've recently gotten back to real estate wholesaling/investing after a long lay off. When I started back in 2003, I was trained by a very successful wholesaler team here in Atlanta to use the following formula when acquiring deals: 65% of the ARV - rehab cost - $10K (the target margin) = max offer to the seller.

Is this formula still applicable in the market today?

I watch other wholesale lists and I can't believe some of the asking prices out there. I wonder if the wholesaler is actually able to move properties that are priced outside of the aforementioned formula. If they are I also wonder how the buyer who actually takes possession of the property is actually able to make money.  

I welcome all comments. 

Thanks in advance!

Will

[Terrence Smith]

I think you seeing it about right. Its not a wholesalers job to make sure the flipper or landlord investor is getting a money making deal. Its the flipper or the landlords job to do that, so if there is enough interest in the market and the wholesaler can find a pool of investors willing to pay more then what you or I would - so be it. As best I can tell, that formula will do fine as a rule of thumb, and you should adjust it based on who your buyers are and what it costs you to find the deals.