7/22/25 wholesale profits
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 buyer can profit after rehab.
· You, the wholesaler, earn a fee for finding the deal.
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