How Do I Know For Sure If My Real Estate Wholesale Deal Is A Good Or Bad Deal?
As with every type of real estate deal that’s ever been put together by a successful real estate investor the answer to this question will be found in the deals “NUMBERS”!
Real Estate investing is a numbers driven business! PERIOD! The number 1 Cardinal Sin in real estate investing is “Falling in Love with the Real Estate that Your Thinking About Putting Under Contract!” What a property “lookslike” has NOTHING to do with whether or not its going to make you any investment money!
Every real estate deal is really no more than a mathematical equation. Nothing more nothing less. If the numbers do not add up to profits and positive cash flow then the deal is NO GOOD! PERIOD! End of DEAL! DON’T DO THAT DEAL!!!!!!!! Its really very very simple to figure out which deals are good and which deals will harm you as an investor. And it all boils down to how well the investor can calculate the numbers on the “Deal Formula Spreadsheets”
Each type of real estate deal has its very own spreadsheet formula! Each of the following type of deal has a specific deal spreadsheet that will determine a good from bad deal:
* BuyFixSell
* BuyFix Rental
* Wholesale Deal
* Lease Option rent to own
* etc……
Once an investor masters plugging ALL of the correct spreadsheet VARIABLES into the Deal Formula Spreadsheets the margin for selecting a “Bad Deal” will be greatly diminished if not eliminated all together!
Wholesalers have a very specific Deal Spreadsheet Formula that works on every deal that we analyze. Taking into consideration that most of my wholesale buyers Investor Buyers will be financing their deal using a Hard Money Lender I will use the following formula to figure out my purchase offer:
Note: Home has a 100000.00 FMV
Note: Hard Money Lender will lend upto 70 LTV Loan to Value
Note: Repairs will cost 10000.00
Note: closing costs will cost 6000.00
Note: My minimum net profit is 7500.00
***Fair Market Value FMV X 70 =70000.00 max. loan amount
70000.00 max loan
10000.00 Repairs
6000.00 Closing Costs
7500.00 My Net Profit
= 46500.00 My Max. Offer to the Seller
My SAFE offer to the seller will be 46500.00. If this offer is accepted by my seller I will make 7500.00 when I wholesale this deal to my investor for 54000.00
46500.00 my offer to seller 7500.00 My profit on the deal
= 54000.00 Wholesale Price that my buyer pays me for the property
Using this formula my Buyer is going to able to borrow 100 of the money needed for his:
* Purchase price
* Repair Costs
*All Closing Costs
54000.00 My Buyers Purchase Price
10000.00 All Repairs Money
6000.00 All Closing Costs
=70000.00 Max loan from the Hard Money Lender
Total time invested in this typical wholesale deal averages just 2 hours per deal! 7500.00 in just two HOURS! Not a bad hourly wage wouldn’t you say!
Blow the Spreadsheet Formulas and you could endup losing your cookies! Not using them at all is next to real estate investing financial suicide for the new and experienced investor alike!
Use your Deal Formula Spreadsheets and always remember this: “The Numbers Don’t Lie!”
20 FREE FAQ videos about real estate wholesaling here? www.FAQMentor.com
About the writer: To find Minnesota lofts and condos for rent go to MinnesotaLoftsAndCondos.com. There you’ll find detailed information about rental properties in St. Paul Minneapolis and surrounding areas.
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