All Forum Posts by: Thomas Fucci

Two formulas:  

If the comps for a property tell you chances are the house will sell for $150,000.  

But you determine you need $35,000 in renovations.  

And you want to make $15,000 on the deal as a wholesaler 

And you want to factor in 3% for closing costs on your side. 

ARV x .80 – minus rehab costs – minus my wholesale fee x .97 = MAO

150000  ARV based on comps 
( 30000)  @ 80% or 20% Equity 
( 35,000) renovations 
( 15000) wholesaler fee
(   4500) closing
65,500  MOA  Max Offer to the Homeowner/seller   
15000  Wholesaler fee
80,500 is what you want to sell it to your buyer (hopefully more but possibly less)

This leaves the investor/buyer with 20% equity in the property, money to cover repairs and closing costs if needed.  If the wholesaler contracts directly from the homeowner who does not have or want an agent, then you are saving money off that $4500 closing.

If the investor negotiates you might find yourself walking away with less than 15,000. That's why it is so important to have good numbers on your repairs estimate sheet.   It's worth getting into a relationship with a contractor who is willing to come along and do some detailed work about kitchen bathroom, plumbing electrical, foundation, roof, etc, and a number to go along with each in exchange for hopefully getting the job or if not, a fee for the work done from you.   An investor who knows what he or she is doing will know if what needs to be done can be done with the number you are suggesting which is why the GC can be key for your negotiations.  

You might be confusing wholesaling with bird dogging.  A wholesaler contracts the property and assigns it to the buyer/investor.  A Bird Dog finds a property for an investor and for a flat fee (depending upon the neighborhood inventory), gives the investor the property info, having contacted and determined the homeowner will take a call, email or visit.  From that point on the investor/buyer takes over, negotiates and closes the deal.  Once the deal closes, if it closes, only then do you get your fee.  Could be as little as $250 and up depending upon the value of the property etc.  Hope that helps