Wholesale Deal Calculator Guide
Key Terms
- ARV (After Repair Value): The estimated value of the property after all repairs are completed.
- MAO (Maximum Allowable Offer): The highest price you can offer the seller while ensuring profit for everyone in the deal.
- Repair Costs: Estimated cost of repairs needed to bring the property to market value.
- Wholesale/Assignment Fee: Your profit for finding the deal and connecting buyer and seller.
The 70% Rule
Many investors use the 70% rule as a starting point:
MAO = (ARV × 70%) - Repair Costs
This allows approximately 30% for profit and transaction costs for the end buyer.
How to Find Great Wholesale Deals
- Know Your Market: Research comparable sales in the area.
- Find Motivated Sellers: Look for foreclosures, tax delinquencies, probate, divorces, or distressed properties.
- Accurate Repair Estimates: Be conservative with repair costs - underestimating leads to bad deals.
- Build a Buyer's List: Network with investors looking for properties in your market.
- Fast Calculations: Be able to quickly determine if a deal works using the calculator.
Red Flags to Watch For
- Properties with title issues or liens
- Structural problems that are difficult to estimate
- Properties in declining neighborhoods
- Unrealistic seller expectations