Buffalo, NY · Member since 2017 · 1 post · 0 votes
Hello, I'm new at becoming a wholesaler/ fix and flip investor. I need a step by step process of how to calculate or what to offer the seller for their property in order for me to profit nicely from the sell. Thank you
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
8y
The general rule of thumb is take the ARV (after repair value) multiply by .7 - repairs - wholesale fee.
So if I find a house that needs 20k and is worth 100k, and let’s say I want to make 5k.
So 100k*.7 minus 20k minus 5k is 45k. So you need it under contract for 45 or less
@Caleb Heimsoth makes a good point with the 70% less repairs and fees. Another tip I would like to offer if you plan to enter the fix and flip world is to check out the bigger pockets podcasts, I think you'll find this episode with J Scott rather interesting, you can listen to it and review the show notes here.
Specialist · Melrose Park, PA · Member since 2013 · 167 posts · 217 votes
8y
If you're flipping, the safe formula is (Conservative - not wishful thinking ARV X 65%) - (EXPENSES AND PROFIT WANTED) = PURCHASE PRICE.
You didn't put holding costs and the cost of money in your expenses and a $5000 profit on a flip is way too low. One budget surprise on the job or a slight mistake in figuring ARV and you have now just broken even or possibly even lost money on the deal. If you're wholesaling, $5000 for your profit is fine but you have to figure the price you're going to sell to a flipper the way I'm showing and THEN your $5000 also gets deducted from the purchase price you're negotiating.