Underestimating ARV/Overestimating cost of repairs

Hartford, Connecticut
Wholesaling
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Underestimating ARV/Overestimating cost of repairs

Marc Massicotte
Member since 2023 · 8 posts · 1 vote

I know there is always talk about how wholesalers should not over inflate ARV and don't underestimate cost of repairs. That being said, did anyone find themselves doing the opposite and being overly cautious on both?

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
2y

It has never happened in the history of the world 

Private Mortgage Financing Partners, LLC
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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    2y

    It has never happened in the history of the world 

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    1Reply
  • Marc Massicotte
    OP
    Member since 2023 · 8 posts · 1 vote
    2y
    Quote from @Don Konipol:

    It has never happened in the history of the world 


     Ha...well played sir. 

    0Reply
  • Samuel Eddinger
    Meriden, CT · Member since 2018 · 698 posts · 500 votes
    2y

    No wholesaler would ever underestimate a number as that is their profit margin and the profit margin of the flipper.  This is why "run your own numbers" is so important in real estate investing.

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  • Marc Massicotte
    OP
    Member since 2023 · 8 posts · 1 vote
    2y

    I was more wondering if anyone did it unintentionally when the first started before realizing their mistake.

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  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Marc Massicotte:

    I know there is always talk about how wholesalers should not over inflate ARV and don't underestimate cost of repairs. That being said, did anyone find themselves doing the opposite and being overly cautious on both?

    I ALWAYS assume more in reno and a bit less in ARV, good to hedge. NEVER take the wholesaler numbers, run them yourself,

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  • David Ramirez
    Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes
    2y

    It's the end buyer's job to run numbers and determine if what you are asking is doable or not. I used to fix and flip before transitioning my business to 100% wholesaling and I never give rehab estimation because I know how different that could be based on exit strategy and experience level. I only offer my opinion of the ARV and always attach 3 comps with it.

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  • James McGovern
    Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes
    2y
    Quote from @Marc Massicotte:

    I know there is always talk about how wholesalers should not over inflate ARV and don't underestimate cost of repairs. That being said, did anyone find themselves doing the opposite and being overly cautious on both?


     I have yet to meet a wholesaler that overinflated repair costs. This honestly would make their numbers more credible

    1Reply
  • Jerryll Noorden
    Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
    2y

    I do it all the time.

    This leads to a bidding war between cash buyers during the walkthrough.

    Funny how all these buyers reach out to me privately and always offer me way more than what I intended to sell for. And they often give me their nonrefundable paychecks WAY faster,  almost eager to give it to me.

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  • Josh Wagner
    Wholesaler · NC · Member since 2022 · 14 posts · 18 votes
    2y

    It's always best to be conservative. If you can inflate rehab costs while deflating your ARV, and it's still a deal then you should have no issues with landing a buyer and getting a healthy assignment fee.

    1Reply
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