Intro to Running the Numbers

Ah...Yes, the numbers. They can be quite confusing and overwhelming when you’re just getting started. The first question is what strategy are you using? Depending on your strategy there are a few sets of numbers to learn. If you’re wholesaling – What do your buyers do? Flip or Rent

Next, what are your buyers buying criteria (do they want $30k in profit on a rehab, or properties with 25% equity minus repairs, or return on investment - ROI, or even a specific cash flow every month)? I say it all the time the more you know about your buyers the better off you'll be.

Here are two examples of how I run the numbers when wholesaling (I'll use a house that is worth fixed up (ARV - After Repair Value) $300k and needs an estimated $40k in repairs:

Example 1 ($30k profit on a rehab)

ARV - $300kx .85 (15% off accounting for holding, closing and selling costs)

= $255k (net Sale)

- $30k (investor/rehabber's profit)

- $40k (rehab costs)

= $185k is your Wholesale Price (price you'd advertise to your buyer)

- $5k your profit (Assignment Fee)

= $180k - Your offer amount

Example 2 (75% equity minus repairs)ARV - $300k

x .75 to get their 25% equity or 75cent on the dollar

= $225k

- $40k repairs

= $185k is your Wholesale Price (price you'd advertise to your buyer)

- $5k your profit (Assignment Fee)

= $180k - Your offer amount

Hope these basic examples help you understand the wholesale numbers a little better. It is a formula you'll develop and then you'll just swap out the numbers each time in that formula. Hopefully, this will also give you a better understanding of what questions you'll need to ask your buyer. 

Now if you’re looking to do the flip yourself I’d still run numbers the same way. Many people will say I can increase my offer by at least $5k if I am not wholesaling. Personally, I do not. I like to leave the numbers as they are and that gives me a little more wiggle room for my deal. 

What if you’re trying to do a rental? Well, I’ve got a great free webinar for you in that department. Get all the numbers for rentals in my Rental Wealth Webinar!

May the numbers be with you! ~Andrea

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