Wholesale Profits

To know if a wholesale real estate deal is a great deal, you need to focus on one key thing: the numbers. A great wholesale deal has enough spread between the purchase price and the property's After Repair Value (ARV) to leave room for your assignment fee and a healthy profit for the end buyer.

Here’s how to break it down step by step:

✅ 1. Know the ARV (After Repair Value)

This is what the property will be worth after it's fully renovated.

·       Look at comparable sales (comps) in the neighborhood. Check with a local realtor. Go to online Zillow.com, Redfin.com etc to get a general idea.

·       Use similar homes (size, age, location) sold in the past 3–6 months.

✅ 2. Estimate Repair Costs

Walk the property (or have someone qualified do it) and estimate the cost of all necessary repairs—roof, plumbing, kitchen, paint, etc.

·       Be conservative in your estimates.

·       Use a contractor if you're unsure.

✅ 3. Use the 70% Rule (for Fix-and-Flip Buyers)

Most rehabbers won’t pay more than 70% of the ARV minus repairs. This gives them room for profit and costs.

Formula:
Max Offer = (ARV x 0.70) – Repair Costs

✅ 4. Subtract Your Assignment Fee

Once you calculate the max offer the investor will pay, subtract your desired assignment fee (typically $5K–$15K).

Example:

·       ARV: $200,000

·       Repairs: $30,000

·       (200,000 x 0.70) – 30,000 = $110,000

·       Assignment Fee: $10,000

·       You must get the property under contract for $100,000 or less.

✅ 5. Leave Room for Everyone to Profit

A great deal is one where:

·       The seller is motivated.

·       The buyer can profit after rehab.

·       You, the wholesaler, earn a fee for finding the deal.

📥 Want help running the numbers?
Sign up for our FREE Cashflow Analyzer to make smart, profitable offers every time!

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