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Apr 30

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Real Estate Investing- Deal or NO Deal? How to Know in Under 60 Seconds!

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keeping timeI don’t know about you, but I want to know quickly if a property is worth my time. I am not one for wasting my time on a property that will never become a deal and make me money. When I look at a property I want to know my MAO ( Maximum allowable offer) before I even leave the property.

When you get a property lead the first thing an effective real estate wholesaler does is research the ARV. You want to know what that property will sell for after it’s rehabbed before you even take the time to go look at it.

 

Once you know the ARV and feel confident that it’s a real estate deal worth pursuing then the next thing to do is go look at the property to estimate the rehab. If you need help estimating rehab costs check out my post A simple way to estimate rehab costs on a property.

I have wholesaled and estimated rehab costs on so many properties that when I walk through a property I can figure out the rehab in my head. So I run the following formula to get my MAO before I even leave the property. However, if you need to take notes as you walk through and then figure out the rehab you can run this formula when your done.

Now that I know the ARV and have figured out the rehab costs I run the following formula to figure out my MAO to make an offer.

 

ARV x .80 – minus rehab costs – minus my wholesale fee x .97 = MAO

ARV ( After Repair Value)

.80 ( Your subtracting a 20% profit for your buyer)

Rehab costs ( An estimate of cost of repairs)

Wholesale fee ( The amount that you would like to make on the deal, your profit)

.97 ( Your subtracting the 3% closing costs)

MAO ( This is the maximum amount you can offer on the deal to make a wholesale profit)

 

Here is an example…

$100,000 x .80 – $10,000 – $5,000 x .97 = $63,050

Keep in mind that some of your buyers may require a 30% profit from a deal. You would then change the .80 to .70 to subtract a 30% profit as opposed to 20%.

This is a quick, easy wholesale formula that will guarantee that your deal is one that will sell and one that you will profit from.

 

To Your Success,

Carol Stinson

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About the author

cstinson

Carol Stinson is a Real Estate Mentor, Author and Entrepreneur who continues to thrive in today's real estate market. Her concept of success is to never stop learning new techniques and then put what you learn into action expecting results. She is dedicated to helping others succeed by sharing what works in today's real estate market. Her strategies are effective, her techniques work and she is always updating them to conform to the ever changing real estate market.

Carol's biggest passion is people! Her love for others and dedication to help them succeed is genuine and ongoing. She created Real Wholesaling in an effort to help others find their way to financial freedom through real estate.

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