How do you calculate how much you are going to make when you wholesale to a cash buyer?

That handsome dude and that cute kid is partially correct. Still.. There is critical info missing here. This is what a good wholesaler does so they leave meat on the bone. A wholesaler first needs to figure out what KIND OF BUYER would be interested in the house. Here is why. You have a house about to put under contract: ARV: 300K Now if you wholesale it to a flipper: Cost of repairs $80K Closing Fees 10% x $300K Wholesale Fee $15K Flippers Profit $40K Price to put it under contract = 300-80-30-40= $150 BUT.. if this deal is more like a buy and hold deal? (think a multifamily, or a condo) We have: Cost of repairs $30K Closing Fees 10% x $300K Wholesale Fee $15K B&H Instant Equity: $20K Price to put it under contract = 300-30-30-20= $220K So depending of what kind of buyer you are dealing with your contract price will change. SO if the seller is willing to sell it at 150K like in the first example, you can get a larger wholesale fee and still find a happy B&H cash buyer to buy it from you. This is the main reason why 80% of the wholesalers suck. They do not take this into account, and everyone complains that wholesalers do not leave meat on the bone.

@Fili Aguirre your selling price minus your purchase price, minus any closing fees.

Account Closed, @Jason D. is correct. It is simply the difference between what your purchase contract and selling contract and closing costs. @John Teachout is also correct. Many wholesalers miscalculate their deals in favor of themselves. A rule of thumb is that your buyer should be paying roughly 70% or ARV less estimated rehab costs. If you overestimate ARV, underestimate rehab costs, or squeeze that 30% down, you're not going to be able to assign your contract. Bottom line, make good offers. So, say you get a property under contract for $150,000. Repair costs are estimated at $25,000 (with some padding included). ARV is calculated at $300,000. You can assume your buyer will be willing to pay $185,000, and that your profit would be $35,000. (I just made up these numbers of the fly, of course.) That would be a good deal. Now, take the same deal, but you get it under contract for $200,000. That's still $100,000 under ARV, which sounds pretty good, but really isn't. It's $15,000 above the buyer's target purchase price. If you try to squeeze that out of the deal by reducing the estimated repair costs, inflating the ARV, or squeezing out the buyer's profits, it won't end well. Look for a deal where there is room to spare. You will either get a nice juicy assignment fee, or you will find that your estimates weren't as good as you thought, but at least there's still a deal to be had. Good luck!

Well, from some of the wholesale deals I've been offered, I think the wholesaler is taking too much meat off the bone. How much profit you make on a property could vary of course but if you allow too much for yourself, buyers aren't going to be seeing it as a deal.

How do you calculate your profit when you wholesaleHow do you calculate your profit when you wholesale

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How do you calculate your profit when you wholesale

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