Here’s an example if you want to make $7,000 on a home that should be worth $125,000: $125,000 (After Repair Value) – $15,000 (repairs) – $7,000 (wholesale fee) = $103,000 (max offer) If you work through this formula and the deal seems to be possible, it’s time to see the house in person. Of course, there are usually unexpected expenses that come up in renovations, but by seeing the property for yourself, you’ll be able to get a better estimate for potential repairs. Wholesalers need to have a good understanding of local repair costs. If you are not construction savvy, you should have a local contractor attend the viewing with you and get a repair/remodel quote. Some wholesalers use typical figures and formulas for certain repairs. As an example, a kitchen remodel costs $10,000, a bathroom remodel costs $5,000, and exterior paint could cost about $2,500. Naturally, these are rough figures and depend on the size and finishes used. An exterior paint job using flat paint would cost less than semi-gloss as some paint is cheaper than others. A kitchen remodel with granite countertops will certainly cost more than formica. After you’ve done the viewing and repair inspection, rework the formula then figure out an offer. It’s often advantageous to offer less than your max so there’s room to negotiate, if needed. (Or maybe you’ll even get it for that price, which means more money in your pocket!)
Closing
Before I continue, it’s important to understand what exactly happens during closing. The buyer signs closing documents,
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