All Potential Deals Should Be Reviewed
I get a lot of deals sent to me AND I LOVE evaluating a good deal!
Often times these deals just don’t work and you have to be able to trust the numbers.
Here is a quick review of a property I received today, which again, I appreciate the awesome relationship I am building with this wholesaler.
By no means want this post to discourage anyone. In fact just the opposite! Any wholesaler who is actually taking action is a good relationship in my book!
Let’s Dive Into The Numbers
The first information you will receive is Price, ARV and Reno cost.
Usually the rest of these numbers are forgotten by the realtor or wholesaler and I want to make sure anyone who has learned from me is sticking to the numbers:
Acquisition $288k
Closing costs $10k
Lender costs $18k
Renovations $30k
Realtor Commisions $17k
Total cost $363k
Arv $360k
Net Loss -$3k
Breaking Down The numbers
That’s a really tight margin for the amount of capital into the project. An investor would LOSE money on this one assuming everything goes well!
If anything goes wrong this could be a massive loss.
The 70% Rule
Most investors follow the 70% rule with rehabs.
If you haven’t heard If it (which I’m sure you have)
It just means that on a $350k ARV property the investor should stand to profit between $80k-115k
So the right investment offer for this property is: $188k
Always ask your contact if they can go back to the seller and see about getting the price closer to YOUR number, and let them know that would make this deal much more attractive.
Be aggressive, take action and stick to the numbers ?
