# Formula for offer price?

Hi all,

I am currently working on a spreadsheet that will help us beginners when analyzing a property for flipping. Which of these 2 “formulas” below is more realistic. Also, let me know if I am not doing something correctly. Thanks

\$127,136.00 ARV OR \$127,136.00 ARV
x 70% - 22,000.00 rehab
= \$88,995.20 - 2500.00 closing

• ``````   22,000   Rehab          -      2300.00  carrying
``````
\$66,995.20 offer - 7628.00 sales
- 2200.00 “oops”
- 20,000.00 Profit
= 70,508.00 Offer

The 2nd one is out of a book. It advised to set your expected profit, and work from that figure. The above figures are just for example. This is not a real deal

NC,

It really depends on what you mean by “flipping.” There are basically two types of flipping, wholesale flip and retail flip.

Assuming that you mean quickselling to another investor, then your figures don’t accurately reflect that as most rehabbers have their own formulas (most use the 70% rule) to decide whether or not to buy. You have to know what is a good deal for your investors, then bid lower than that.

As to a retail flip, then it’s really up to you to decide on your formula for success. The 70% is a tried and true formula. If you only look for deals that fit into that formula, then you’ll make money. However, it also makes it harder to find deals. Many experienced investors make up their own formulas that work best for them and their market.

Raj

Roger,

I was referring to the retail flip.

Thanks for the information.

Bill

Bill,

I was wondering what book you got this formual out of.

The book is “Buy it, Fix it, Sell it for Profit.” by Kevin Myers. Out of the 3 books I have, this is the best one in my opinion.

Can you please post or email me when you’re Spreadsheet is complete? Would appreciate it.