When houses are listed below market value...

The 1st & only offer I made on my 1st wholesale deal on a HUD home was around the same exact number my buyer was willing to pay. He had funds to close, fix & flip it. But, he chose to wholesale it to his end buyer. If I woulda realized it, MY max offer woulda been 10% less & I woulda made more $. But, you live & learn.

My offer was based off the 70% wholesale formula. It looks something like this:

ARV (x) 70% - Repairs - Your Fee = Max Offer (For You)

The seller's total price would be = Your Max Offer + Your Fee

SO, An example of this for you would be:

$149,165 (ARV) x $104,416 (70% of ARV - $7,000 (Repairs) - $6,000 (Your Fee) = <$91,416>

Based on repair costs & how much profit you want to make, your offer range would be somewhere between $81,416 & $91,416, with $91k being the highest your offer. The buyer price to buy it would be: $97,416, which includes your profit.

Personally, I think $20k on your 1st wholesale deal is too much for a wholesale fee esp. if you're 1st starting out. Generally if the numbers are great and the buyer doesn't care, I say go for it.

I am not understanding what you mean by this affecting your 25:1 offers. 25:1 means you put out 25 offers and one should get accepted.

I can see I made this a bit more confusing than I meant too.

Really, I think I know the answer is it doesn't matter because you're making offers based on the ARV regardless of what the asking price is.

The 20k was not referring to my wholesale profit. That would be my hypothetical buyers profit. My wholesale fee would be much less.

And yes thishousebuyer, I've found so far anyway, that Matt's system and the 70% rule are not that far apart.
femailceo, I was referring to it possibly affecting the way you approach the #s of the 25-1.

Anyway, I think I'm all set, thank you!

First of all you have the formula wrong. I am not sure what the .90 is but if you already are deducting 20k profit for your buyer you do not need it in your formula.

I suggest that you keep all of your offers a standard formula and do not go by what the property is listed for but rather the actual ARV.

My formula...

ARV x .70 ( This leaves %30 profit for my buyer)
- rehab
-my fee
x .97 ( this will subtract 3% closing costs)
= MY OFFER

Hope this helps

Hi Carol,

The offer formula is taken straight from a presentation I heard Matt Larson make and it basically just looks like a slight alteration of the one in Dean's 30 Days book. The .90 just accounts for Realtor fees and a 3% discount off asking price. Maybe it's just another way of going about the same thing? Anyway, I have also run #'s for practice almost the exact same way as yours. Thanks for the feedback! Every bit helps! Yes the ARV seems like the key #.

I'm trying to get all my newbie questions out of the way before I start. Haha..

you don't reduce your buyer's profit... you buyer will tell you what he/she wants and you find a deal with your buyers' numbers in mind... as they say, always overestimate your costs, and underestimate your ARV, so you don't come up short

are right on the money. Stick to the formula Carol advised and also know what your buyer needs and then figure in your profit.