I dont trust this...what do you all think?
Ok, for wholesale deals I was taught to use the formula Arv x .5 minus my fee (5k min) and minus repairs = Max allowable offer I can make on a property. Right? Ok. I go into Propstream pro and I find a property.
- The estimated value of the property is $51,415
- The last tax assessment of the property was $34,070
I take the ARV (which is the estimated value of the property, right?) of $51,415
I multiply that by .5
I subtract $5,000
I estimate repairs by taking the square footage (1,400) and multiplying the square foot by $20 (assuming a gut job).
Here is my math:
51,415 x.5 -5,000 - (1400x20 = 28,000) = -$7,292.50
Is that right? So this is a deal I should overlook because I cant make any kind of reasonable offer. Right? I feel like my math is off because ALL 200 properties I have evaluated are coming up a negative number, or too low to offer on. What am I doing wrong?