I have a question for those who wholesale properties. Is there a specific formula that you use to actually make the offer to the seller as far as the price,
also how do you decide how much to charge as a assignment fee? do you have a set percentage?
Well basically what you want to do is this….take the FMV * 70% - Repair cost – Assignment fee = you max offer. Now the 70% will go up to 80% if the house is in a great area needs no work and properties are moving fast. Now on the other hand if the house in is a not so great area and properties are moving slow then I might offer less. Also if it’s a frame house and needs a total rehab then I would start at 50%… Well I hope that helps.
yes thank you very much
Is there an electronic way to get a better accurate in determing a repair/upgrade cost? I dont like estimating on the fly. But I do know that you would need to add 20% over your estimate for the under expected.
I guessing I would have to write down a list of upgrades and goto Home Depot/Lowe/and Direct Sales of products.
But i want to save time. Is there a quicker way (not a short cut but a quicker way to come to an estimate for repair cost?
Don’t forget to subtract closing costs from the 70% formula. I always use 6% which usually covers any closing points that the rehabber that I am wholesaling to might have to pay and also any taxes, insurance, etc. that they might have to pay. Ex) 100k house x 70% = 70k - 6%(4200) - repairs - assignment fee (5k)= offer. And even after I get to the offer amount I still subtract some room for negotiating. So on that 100k house if there are 10k in repairs I might offer something like 47,860. I’ve found that it is better to go with an odd number like that too because then it looks like you know what you are doing and you have your numbers crunched down to the last dollar. Hope that helps. Good luck. :beer
seems to be high on certain things- but could give you ballpark numbers if you are new