My best friend and I are wholesaler newbies. We were introduced to it by a friend who is on Dean G's website. The website give 50 thousand ways to run numbers and it has our heads spinning. We just need a step by step formula that works and makes sense. We are both single moms...walking the walk...and we are taking this very seriously. Any help anyone can provide...we would greatly appreciate.
Thanks so much in advance.
I don't like wholesaling. I have done a few but mostly do the entire flip. The reason I don't like it is that you have to do all of the same calculations but with little margin of error. I can build 20% profit in my numbers where you can only build 5%. If I make a 5% error I still have 15% profit where you have none.
Secondly, each flipper has his own formula and you have to guess what it is plus build in your profit. An alternative to wholesaling is to become a realtor. My wife sells 50-100 houses per year with a commission of 2.5% to 5%.
I will give you my formula. Remember it will only work if you are trying to sell to me.
First, I determine the ARV. I then subtract 12% for realtor commission to sell, Margin if I overstate ARV, possible payment of buyers closing cost and my closing cost.
Next I will subtract out my 20% profit on the above result. I also subtract holding costs of about $3,500 in my area. The next is my estimation of rehab costs. I actually subtract 120% of my estimate. I am left with what I am willing to pay.
If you were selling to me you would have to add in your profit to determine your maximum buy price.
I hope this is of some help.
Thank you so much for your quick response. It would be impossible for me to become a realtor right now as I am a single mom working 2 jobs. I would not be able to wait for money to come in for my first deal and wouldn't be able to show houses as I am at work for 12 hours every day 6 days a week. A close friend of mine recently became a realtor on Long Island and she completely regrets it. I'm not sure where you live, but here In New York It's extremely difficult for a realtor to get started and make money. It's very cut-throat and It's a career that works if you've been in it for many years.
I'll run your numbers and see what I come up with. I really do appreciate your help.
Google search the reia's in your area and look for "bring your deals" or "haves & wants". Bring a pad and write Down what people are looking for. The rehabers will give you the formula they want and the amount of repairs they look for. Most that go to mine ask for 65%arv-repairs. And they all want flix and flips.
They'll be happy to tell you the formula they use because you'll be finding them a deal.
Thank you so very much for your help and your time. I greatly appreciate it. I looked up the next meeting and there is one next week. I will def be there.
Thanks again and God Bless
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