"Formula" for making an offer on a property

Bird Dogs, Wholesaling
1

At what discount off of the ARV or Market Value should i be making my offers at.

2

I think it ultimately depends on what your end goal is. If you’re wholesaling, I think it’s 65% ARV-Repairs-Assignment Fee-Holding Costs

At least, this is how I understand it to be. But, this would likely change on rental properties and flips would not include the assignment fee…so, would depend on your goal for the property.

3

Holding costs would already be part of the 65% figure. In some place you may have to use 50% or 55% ARV minus repair costs and assignment fee.

4

Do a quick search on the forums for “Maximum Allowable Offer” or MAO. This topic has been discussed in depth on several occasions.

5

Lawyer answer - It Depends
Depends on where you are and what other rehabbers/landlords are paying
Have an agent pull you all the SOLDs in your target area - sort by size then look for the bottom end priced ones.
in your list you’ll see ARV values and the lowend purchase prices - you’ll be able to use tax rolls to find who bought those low priced ones and get a mailing address to contact them (buyers list) and get an idea of what junkers are going for and what other investors are willing to pay - back into your formula that way…you’ll get deals done quicker and with less frustration - everyone will want to tell you the lowest possible but reality tells you what they will pay.

6

Every deal is different but the average deals here in Jersey are Type 3 and 4 Area’s 65% of ARV, minus repairs and wholesale fee
in type 2 areas we use 60% of ARV, minus repairs and wholesale fee

7

I always tell my students a great place to start is “Less than what you’re buyers will pay”

Of course the deeper you can buy the better…But don’t get hung up on a particular percentage…How about just trying to buy at the lowest possible price every time?

I’ve done deals that I got at 85% of retail, then sold them for 95% of retail and still made over $10,000.

First find you’re buyers.

Then find out what maximum percentage of market value they are looking to buy at…

Then buy as far under that percentage as possible…

Easy formula to follow…But it ALWAYS works.