How to determine your offering price?

For all experienced “rehabbers” and/or “wholesale”. What is the formula you would use to determine your offering price. I have heard 65-70% of ARV, however this is a little to simplistic. I would imagine this would be dtermined by the actual sales price as well the cost of repairs and time to perform the other work, holding costs, etc, etc. I am a Landscape Design/ Maintnenace contractor and use a fomula every time I bid on a job/ write out proposal. I live in the Norhtern NJ area as well.


The standard is:

(ARV) * 75% - Repair and Holding costs

I work a little closer to the edge…maybe 80-85%…but I am buying to hold not to flip.


I have a spreadsheet that works like this. First I take the repair costs, add in the cost of holding the property (PITI, neighborhood association fees, R/E taxes and insurance) for the amount of time it will take to fix it up plus the average days on the market for a house like the subject property in the same neighborhood. I then add to that the anticipated commission and closing costs. I take the ARV subtract that number from it and I have the break even purchase price. In other words, if I buy the property for that price I make no money and lose no money. I then decide how much profit I need to make ($10k to $20k minimum).

A wholesale deal is usually not even close to asking that price and a bid of 75% to 80% of the ARV leaves plenty profit money.