What up guys and gals
Im hoping someone could chime in and help me on this. Ive read so many books on REI that really Im just overloaded with the information and currently in analysis paralysis ( sorry if I did not spell that right)
Im having confusion with the buying formula for an all cash offer deal. To many variables from all these different authors with almost the same approach. This is my understanding. In a cash offer I need to get a nice discount in order to make a profit. I will not be doing a double closing, I just want to wholesale the house to another investor. Is wholesaling the same as assigning my rights on my contract for someone else to close?
This is where the cash formula comes in. From my understanding,Lets say for example I make an offer on a house that has a:
ARV of : $100,000
70% of 100,000 is : $70,000
minus rehab repair: $20,000
minus costs of holding,closing and selling( 10% of arv) $10,000
minus appraisal fee( for appraiser to do a subject to repair appraisal) $300.00
minus my wholesaling profit: $10,000
Maximum Allowable Offer for this property: $29,700
Where I start my negotiation is by deducting 15% from $29,700 = $25,245
So from my starting point of negotiating me and the seller need to come to an agreement in between $25,245-$29,700????????
So in order to wholesale it to another investor and make my $10,000 while still leaving a 25% to 35% profit spread in there for them or more. I would need to sale my contract at $39,700 right?
(Please forgive im a newbie at this) just doing what ive read in some of the books.
Now Im confused because the guy i learned this formula from I just cant seem to understand. It seems like he wants to screw us over while he makes a big profit. It sounds contradicting to me. Here take a look at his example buying formula: Im just quoting what he is saying by copying and pasting it here
"Remember that we are wholesalers. This means that we have to sell at 70% of the ARV. That 70% ARV needs to include the cost of the house, rehab cost, our wholesale profit, and points and closing cost. Anything below that offer will be your profit.
Example:
This is an example of where our numbers need to be. Depending on the area and other due diligence, we may have to go below 70%.
ARV $100,000
70% $70,000
Less Rehab -$20,000
Less Taxes, Insurance and Attorneys Fees
-$2,000
Less points for hard money (5% on 70K) -$3,500
Less our wholesale profit -approximately 10% 0f ARV
We will buy at a cost of $34,500
You would need to negotiate a lower price for your profit.
Please do not submit a property until you have already negotiated the required discount. "
Im hoping someone could chime in and help me on this. Ive read so many books on REI that really Im just overloaded with the information and currently in analysis paralysis ( sorry if I did not spell that right)Im having confusion with the buying formula for an all cash offer deal. To many variables from all these different authors with almost the same approach. This is my understanding. In a cash offer I need to get a nice discount in order to make a profit. I will not be doing a double closing, I just want to wholesale the house to another investor. Is wholesaling the same as assigning my rights on my contract for someone else to close?
This is where the cash formula comes in. From my understanding,Lets say for example I make an offer on a house that has a:
ARV of : $100,000
70% of 100,000 is : $70,000
minus rehab repair: $20,000
minus costs of holding,closing and selling( 10% of arv) $10,000
minus appraisal fee( for appraiser to do a subject to repair appraisal) $300.00
minus my wholesaling profit: $10,000
Maximum Allowable Offer for this property: $29,700
Where I start my negotiation is by deducting 15% from $29,700 = $25,245
So from my starting point of negotiating me and the seller need to come to an agreement in between $25,245-$29,700????????
So in order to wholesale it to another investor and make my $10,000 while still leaving a 25% to 35% profit spread in there for them or more. I would need to sale my contract at $39,700 right?
(Please forgive im a newbie at this) just doing what ive read in some of the books.
Now Im confused because the guy i learned this formula from I just cant seem to understand. It seems like he wants to screw us over while he makes a big profit. It sounds contradicting to me. Here take a look at his example buying formula: Im just quoting what he is saying by copying and pasting it here
"Remember that we are wholesalers. This means that we have to sell at 70% of the ARV. That 70% ARV needs to include the cost of the house, rehab cost, our wholesale profit, and points and closing cost. Anything below that offer will be your profit.
Example:
This is an example of where our numbers need to be. Depending on the area and other due diligence, we may have to go below 70%.
ARV $100,000
70% $70,000
Less Rehab -$20,000
Less Taxes, Insurance and Attorneys Fees
-$2,000
Less points for hard money (5% on 70K) -$3,500
Less our wholesale profit -approximately 10% 0f ARV
We will buy at a cost of $34,500
You would need to negotiate a lower price for your profit.
Please do not submit a property until you have already negotiated the required discount. "
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Last edited:
Membership Required: Upgrade to Expose Nearly 1,000,000 Posts
Ready to Unleash the Millionaire Entrepreneur in You?
Become a member of the Fastlane Forum, the private community founded by best-selling author and multi-millionaire entrepreneur MJ DeMarco. Since 2007, MJ DeMarco has poured his heart and soul into the Fastlane Forum, helping entrepreneurs reclaim their time, win their financial freedom, and live their best life.
With more than 39,000 posts packed with insights, strategies, and advice, you’re not just a member—you’re stepping into MJ’s inner-circle, a place where you’ll never be left alone.
Become a member and gain immediate access to...
- Active Community: Ever join a community only to find it DEAD? Not at Fastlane! As you can see from our home page, life-changing content is posted dozens of times daily.
- Exclusive Insights: Direct access to MJ DeMarco’s daily contributions and wisdom.
- Powerful Networking Opportunities: Connect with a diverse group of successful entrepreneurs who can offer mentorship, collaboration, and opportunities.
- Proven Strategies: Learn from the best in the business, with actionable advice and strategies that can accelerate your success.
"You are the average of the five people you surround yourself with the most..."
Who are you surrounding yourself with? Surround yourself with millionaire success. Join Fastlane today!
Join Today
