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Updated over 7 years ago on . Most recent reply

Wholesaling For Newbies: The Correct Math Equation
Hi BP,
I am torn between two wholesale equations. The first being
70% ARV -Repairs- My Profit= Maximum Allowable Offer
OR
ARV – Rehab – B/S/H – Your Profit – Investor Buyer Profit=Maximum Allowable Offer (MAO)
After Repaired ValueMinus
Rehab Costs Minus
Buy/Sell/Hold Costs Minus
Profit EqualsMaximum Allowable Offer
Advice is well appreciated.
Most Popular Reply

@Cody Evans, Great Post
I use this formula when evaluating investment property.
Maximum purchase price = Sales price - fixed cost - profit - rehab cost.
In order to determine a property's sales price you want to: 1. Pull comps from the mls, (when pulling comps look for: time of sale, location/proximity, age and style, size, condition) 2. Adjusting your comps to add in special features 3. Determine the value of the subject property.
3 types of fixed cost you want to keep in mind: 1. Purchase costs - Inspection, closing, and lending fees 2. Holding costs - mortgage payments, property taxes, utilities, insurance 3. Selling costs - commissions, closing costs, home warranty, termite letter, listing fees.
Hopefully it helps you out.