Posted by Jim FL on November 28, 2006 at 21:19:51:
Clare,
I would not call myself a rehabber or wholesaleer, per say, as I use whatever method makes the most sense to get the deal done.
And naturally, all deals have more than one exit built in for profit.
Now, when I do wholesale, the number I use as a ‘bottom dollar’ is $10k.
However, not all ‘deals’ turn out that way.
Example:
Last month, someone sold me a MH for $1k, and I sold it the next day, for $6k cash, only making $5k.
This was below the ‘bottom dollar’, on my scale…but, it made sense.
See, just before this seller called, my friend called and told me he was looking for a cheap single wide, because he had the land to place it on, and the equipt to move it.
He also told me what he had to spend, so the details fell into place.
As far as a rehab, the numbers there are more a percentage than a fixed number.
Reason being, I have rehabbed houses in multiple price ranges.
The last one, we picked up for $68k, put $30k into it, and sold for $175k.
A nice deal.
I will not touch a rehab however unless I KNOW, worst case scenario, that there is $25k to be made.
Basically, I make sure the numbers allow for more than that, and buy low enough that the property will sell FAST, as is, and bring in the $25k.
Of course, this number does not work with a home priced at $500k.
There are factors in each deal that are unique, price range being merely one of them.
A good formula to follow, if you must, would be the common one talked about here.
After Repaired Value times 70%, minus repairs and your profit, for wholesale deals.
Anyway, HTH,
Jim FL