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Updated about 3 years ago on . Most recent reply

ARV - What Percantage
Hey everyone, I'm a wholesaler in search of my first deal but have been having issues with how to properly run my numbers in this market. I'm located in Fort Worth, TX and searching in all of DFW area. I know the standard formula goes ARV - 70% - Wholesale fee = Buy Price, but I know that most of these offers I throw are well below what some people are asking for on market. Maybe that percentage works better when I find the right motivated seller and it's off market but for on market deals I find myself calling agents and having my offer be the lowest thrown out there. I'm also not putting in a high wholesale fee because I understand on market doesn't tend to have high profit margins, off market is where those margins can be better. My question is what should my percentage be based on my location? or how can I find out these number so I can have a better chance at striking an actual good deal?
Good old Algebra : ARV - x - Wholesale Fee = Purchase Price, What is the value of x?
Most Popular Reply

I'm not a wholesaler, and by no means an expert, so take what I say here with a grain of salt. My thinking on your situation is as a wholesaler you should be focusing on off market deals and not be wasting your time with trying to wholesale homes that are already listed on the MLS. Typically people who have their property listed on the MLS are wanting top dollar, their homes aren't needing much work, and they typically don't have a problem waiting until they get an offer they like. The market is so hot in Texas right now I find it very unlikely that most people who have their home listed on the MLS are willing to take a large discount on the price of their home.
In my opinion a better strategy would be to find distressed homeowners, who either need out of the property quickly for whatever reason (they need cash for something quickly, they inherited the house and just want to sell, etc.), or find properties that need work that the current owner doesn't have the time/ patience to do. Driving for dollars or sending out direct mail may help you find off market deals. But again, I'm not a wholesaler so I could be completely wrong. These are just my thoughts. Hope this helps!