Im a Newbie who needs advice

I just started wholesaling. I found a property in my area that has had some fire damage. ARV is approx. $60k. I viewed the property and it needs insulation, sheet rock, cleaning out…everything. The owner has put a new roof on property, which is about 4 years old. He has also rewired property. Owner is asking $10k for the property. Is that a feasible number to work with? If not, What should my asking price be? What number should I not go above in terms of asking price? Thanks for your assistance.


If the "After Repair Value" (ARV) / "Fair Market Value" (FMV) is $60k then the wholesale price for pristine condition property with no deferred maintenance is $42k. 

Now you have an opportunity to buy this property for $10k however there is more to this so let’s look at the numbers:
Now this is looking at this property from your buyers perspective who will sell to an end buyer retail at a $60,000 dollar sale.

$60,000 ARV / FMV
<$18,000> 30% Investor Wholesale Percentage
<$5,100> End Buyer Sales Cost Realtor Commission (6%) plus Escrow / Title Insurance Cost (2.5%)
<$10,000> Purchase Price
<$200> Purchase Escrow Buyers Closing Cost

$26,700 Available Rehab and Holding Cost Capital

$36,900 Is the budget for purchase, closing and rehab / holding cost budget
$950 Monthly Carrying cost at 18% plus utility / insurance budget

$36,900 Financed / Personal Capital @ 18%
<$10,000> Purchase Price
<$200> Buyer Closing Cost 2%
<$5,700> Holding Overhead Cost’s (Interest, Utilities, Insurance, Etc.)

$21,000 Actual Rehab Budget Available

Now $21k is about $21 per square foot for a 1000 sq. ft. home or $10.50 per sq. ft. for a 2000 sq. ft. home.

Now the most cost effective carpet I use is $13.50 a yard installed with 1/2 inch pad which is $1.50 per sq. ft.
Now painting interiors is probable $2 per sq. ft. for white ceilings, colored walls with white trim. (Includes materials.)

Now you probable see where I am going, some of the major remodels I have done on my fix and flips can cost upwards of $60 dollars a square foot. In fact a new home today averages $60 to $65 per sq. ft. to build.

Fixing existing stuff always costs more than new construction.

The problem with the property you refer to is the sq. ft. cost to remodel may exceed the ARV / FMV budget for rehab you have budgeted for. This is probable a tear down property which should become a vacant lot!


thanks so much. I appreciate your response. God bless!

Walk away, don’t fool with this property. Unless you have experience in this area, it’s too much of an undertaking. I’ve been a carpenter for over 30 years and a Building & Remodeling Contractor for 18+ years. If you’re using contractors they will tap your bank account and demand money for unseen problems.

Look for easier deals with less personal investment to start with.

Hope this helps!