Sorry, couldn’t find this in search.
I’m literally days from starting my wholesale adventure.
What do I base my offer on? I’m comfortable getting my ARV from zillow.com or something similar but how do I base the offer?
is it ARV
minus construction
minus 65%
minus my fee?
how do I set my fee? I was pretty sure it’s roughly 10% of the ARV.
:banghead
Hi,
Ok, lets go through the numbers!
First Zillow and aol home values are fine to give a rough idea of price, but when you get a contract excepted you have to go back and get actual comps to ensure you know the market and where are values being derived from.
FMR = Fair Market Value
Minus (-)
Realtor Fee’s
Closing Cost’s
(These are to resell property)
Minus (-)
Repairs (All supervision, Contractors and Sub-Contractors)
Overhead Cost’s (Taxes, Insurance, Utilities, HOA Fee’s, etc)
Carrying Cost’s (Interest on a loan & Interest on your money)
(This is your cost to remodel)
Minus (-)
Purchase Closing Cost’s
Inspections (Termite, Home Inspection, Survey, etc)
Points & Lenders Cost’s
Any Lien’s (Your excepting and paying after closing - Example Taxes)
(These are your cost’s to purchase)
We generally make between 10 and 15% of FMV for profit as investors.
So you purchase the property for less than these numbers plus your wholesaling profit percentage!
Some wholesalers may make as little as a few thousand to some percentage depending on the property.
All the numbers above are my cost’s as an investor to buy from a wholesaler exclusive of the wholesalers profit!
Good luck,
GR
Your also going to have your purchase closing cost’s to buy and flip to another investor!
GR
oh my god. :shocked how in the heck do I know what all those costs are? holy smokes.
I emailed a wholesaler I met in philadelphia about this and he told me that it depends on your market but in his market his equation looks like this:
65% of ARV
He said that the 65% may be different in this market and a good way to tell is to find out the highest hard money lenders are lending on “ltv” :huh