Can anyone please help me with understanding how to make an offer on a property for a good wholesale flip?
What on avarage will an investor pay for a house, what type of discount are they seeking? I seen on here that most look to buy at around 65% of FMV - repairs, is that correct? if so, how is it possible to get a contract on a house BELOW that value???
Ex…
Say I have the following house…
FMV = 100,000
Repairs = 5,000
So the investors formula would be like this
100,000 x 65% = 65,000 - 5,000 (repairs) = 60,000 purchase…correct?
if that is the case, who in their right mind would let me get a house under contract for less then 65% - repairs in order to make a profit?
Basically I wanna know what type of percentage discount I need to be looking for in order to make a profit flipping…
Also, the more expensive the house the less of a discount I need to get?
This is my excel formula I am using, please review
Fair Market Value (FMV) $400,000.00
x % Below FMV 80%
Discount Price $320,000.00
Estimated Price of Repairs $3,000.00
Assignment Fee 5% $16,000.00
Buying Offer Price $317,000.00
Selling Price $333,000.00
as you see at 80% FMV there is still plenty of room for a flip on an house this expensive, with the above example the investor cold possibly make 64k profit, with me buying at 80%!
Fair Market Value (FMV) $400,000.00
Investors Offer $333,000.00
Repairs $3,000.00
Total After Repairs $336,000.00
Investors Proft Margin $64,000.00
But an house with a FMV of 80k, I would need to get a better deal then 80% FMV in order to have enough spread for a deal, it would have to be closer to %60 FMV to have the spread correct?
This probably makes little sense, hope It’s not to confusing, Im new at this and have tons of questions! Thanks in advance for your responses…