Flip analysis: I would really appreciate some help
So I have a great deal.
A home in a great area, that is continuously getting rehabbed, great neighborhood ect.
The ARV=235
It is estimated to have about 60k that needs to be done in upgrades
However If it wasn't to be upgraded then it would have only cosmetic work that needs to be done. And can be tenant ready immediately. In fact a tenant just moved out. I estimate about 3-5k in immediate cosmetic repairs.
I used the formula ARV-Repairs*.70= 164K
So I set my asking price at 164K
The buyer and I are going back and forth negotiating and she wants the price lower because of the rehab costs
So what I want to know is as a wholesaler do i conform to the needs of the buyer.
My mindset keeps going to stick to the formula, my only goal is to use my formula to structure my deal.
But the real reason i am so hesitant is because this is a really good deal and I dont want my ignorance to make me miss out on an opportunity.
I dont want any money left on the table , so can someone tell me the best negotiation method to use? and guidance of what they would do in this situation ?
Most Popular Reply
First, for a flip, the formula is (ARV * .7) - Repairs, not what you wrote above.
Regardless, using either of those formulas, the max purchase price is much lower than $164K if you plan to flip it with $60K in repairs.
(ARV * .7) - Repairs = $104,500(ARV - Repairs) * .7 = $122,500
If you're looking to hold it as a rental, then that formula is meaningless. You need to run a rental analysis to determine the right price, and that's a bit more complicated than just a quick formula.
As for negotiating, BP has a book for that:
https://www.biggerpockets.com/...