How to Buy and Sell a House for $100

So, you’re thinking about becoming a real estate wholesaler.

If you’ve spent any amount of time lurking around the real estate investment community online, you’ve probably come across the buzzword “real estate wholesaling.”

To many, wholesaling is the gold standard for getting started in real estate.

To others, it’s downright illegal, it’s unethical, and it should be avoided at all costs.

What’s the truth then? Is it actually illegal?

If it is legal, how does this real estate strategy actually work?

And if it’s legit, is it really the best option for a novice real estate investor?

Over the last few years, I’ve been a blogger, a podcaster, and an actual practitioner of real estate wholesaling in Indianapolis.

I’ll spare you the entire backstory for now (this post is going to be long enough without it), but the gist of it is I worked for a company called Simple Wholesaling.

At first, I was hired to be their designated brand developer. After publishing a few blog posts, crafting an ebook, and starting a podcast, though, the company took a different direction and we decided to switch gears from creating content to focusing more on doing deals.

Over the next couple of years, we went from buying and selling 8-12 properties per month to averaging 25-30.

So, with everything I’ve seen of the business, you might say I know a little about this stuff!

What Is Real Estate Wholesaling Exactly?

Before we answer these pressing questions, allow me to introduce myself.

If we take the word “wholesale” and look it up on dictionary.com, we get this apt definition:

To break this down, it’s the sale of “goods” in quantity, to “retailers” – or businesses, for the purpose of “resale.”

So, when we talk about wholesaling in regards to real estate investing, you could simply define it like this:

In short, a real estate wholesaler provides inventory for real estate businesses and investors – primarily for those who flip houses or who are looking for single-family rental properties.

Now, there are three primary methods to conduct business as a wholesaler:

• Through assignments
• Through the “double close”
• Or through the traditional close

Wholesaling Steps:

(step-by-step guide included)

Real Estate Wholesaling Through Assignments

Since this is the most common perceived method of wholesaling real estate, let’s start here.

Essentially, what is happening in an assignment is that a buyer is selling their rights within a purchase agreement to another buyer.

Before we talk about it in regards to wholesaling, however, let’s go over an example of the more conventional use of a real estate assignment.

Let’s say you’re an active buy-and-hold investor who purchases several properties a month and only buys properties built on a slab foundation. You know there are great deals that have basements, but you simply don’t want to have the extra risk that comes with it (flooding, moisture, etc).

Now let’s say there is a property that was advertised as not having a basement that you thought was a good deal. You made an offer, it got accepted, and you and the seller signed a purchase agreement. During your due diligence period, however, you discover that this property was falsely advertised and actually had a basement.

At this point you could either:

A) Pull out of the deal.

… or …

B) Assign the rights to the purchase agreement to another investor (for a fee) who has no problem with basements.

If you went with option B, you’d still make some money on the transaction, whereas with option A, you would have completely wasted your time.

This is an example of the conventional use of a real estate assignment. Its purpose is to allow a way for a buyer to ethically get out of a deal, based on , while still keeping the seller locked in.

Having said all that, one of the crucial aspects of wholesaling through assignments comes down to intent.

In order for an assignment to be valid, both parties need to enter the original purchase agreement with an honest intent to close on the property, otherwise, the purchase agreement was never a true purchase agreement, and therefore any attempt to do an assignment would be null and void.

We’ll come back to this point here in a moment.

How Assignments Are Used By Real Estate Wholesalers

When you wholesale real estate through assignments, what you’re effectively doing is entering into a purchase agreement with a seller, and then turning around and assigning your rights (as the buyer in that purchase agreement) to a different end buyer.

(custom templates with mail merge included)

The biggest advantage of this method is that (unless you provide an earnest money deposit, which many wholesalers don’t do).

This means that as a wholesaler, your only expense in the process is marketing. This is a HUGE deal because you can make thousands of dollars a month with little to no risk.

If you can’t find an end buyer, you can simply back out of the deal, making this one of the safest real estate businesses to get into.

Let me give you an example …

Let’s say you go driving for dollars, and send out some postcards to owners of distressed properties.

About a week later, one of many property owners will call you and say they want to sell.

The property is located in a solid, up-and-coming neighborhood, and, after you run your numbers (in an upcoming post, I’ll dive deep in exactly how you do this), you offer $25,000 and they accept. Here are the steps you take:

1. You have them sign a purchase agreement with a long closing period (you should shoot for a 30-to-45-day minimum in order to have enough time to find a buyer).

2. You email the property information out to your buyer’s list and begin marketing it with your assignment fee amount included in the price. So, if the purchase price stated on the original contract is $25,000, you could list it for $32,000. Also, again, I’m not a lawyer, but a common practice many wholesalers do is market the contract for sale and not the property in your advertising language.

(more detailed versions included)

3. Once a buyer shows interest, you assist them with getting inside the property and being as helpful as you can while they run their numbers and do their due diligence.

(included)

4. They make an offer, and you both negotiate the final price, coming to an agreement. For the sake of this example, we’ll say the final price is $30,000.

5. You send the end buyer a copy of the original purchase agreement

6. Once it’s signed and returned, you send everything to the title company. Note: This part of the process is specific to the State of Indiana (where I’ve worked as a wholesaler). Depending on what state you’re doing business in, your closing process may look very different.

7. At closing, the title company handles the exchange of funds, the completion of all paperwork. When everything is complete, they issue you a check for $5,000!

My Best Advice When it Comes to Wholesaling Real Estate Through Assignments

In my honest opinion, there are much better ways to wholesale real estate. With all the “grey areas” involved with assigning contracts (legally-speaking),

If you absolutely MUST wholesale through assignments, why not become a real estate agent who specializes in connecting the distressed property with investors?

It’s practically the same business model, without all the risk. The major difference is that instead of making money from the seller on a percentage of the sale price (as an agent), you’re making money from the buyer through an assignment fee (as a wholesaler).

As an agent, you can mitigate this by simply negotiating a flat rate as a commission (e.g. – a $5,000 commission instead of 3% of the sale price). You could also try and structure it so the buyer pays the agent’s commission, not the seller.

This is unconventional, but if you’re working with real estate investors, I don’t think you’d have any issues structuring transactions like this because they know what’s involved in working with a motivated seller — namely that they can’t afford to lose any more money!

How To Find Motivated Sellers

The first and most vital step in any real estate wholesaling business is finding great deals.

• Send mailers to out-of-state landlords of multifamily houses
• Send mailers to absentee owners of single-family houses

(Editable version included)

• Send mailers to vacant landowners (only in specific areas in the path of growth)
• Place “We Buy houses” flyers/business cards at unemployment offices….a lot of people there could be having trouble with their homes and may need a solution

(Examples, templates, and guides included)

• One-page flyers posted on bulletin boards at large stores
• Post ads on craigslist stating, “We Buy houses”

• Send emails to craigslist ads with properties for rent (the emails will go to landlords who may be looking to sell, or buying more properties)
• Mailers to specific zip codes, asking if they want to sell or know someone who does

(included) 

• Mailers to divorce attorneys who can refer clients
• Mailers/emails to FSBOs
• Buy a “leads list” of landlords from AgentPro247 or RealQuest
• Post ads on Backpage stating “We Want To Buy Your Property” (Note: Backpage has since been shut down, but you can do this same thing in various Facebook Groups)
• Send mailers to properties purchased between 3k-20k within last five years (the owner might be a novice flipper who never did anything with the property)
• Send mailers to Estate/Probate Attorneys (if you have an attorney, consider having them send the letter because attorneys tend to open mail from other attorneys)
• Bandit signs: “We Buy Houses”

• Send mailers to owners who have owned for 15 years or more (these properties tend to be owned free and clear, which means they could be much more flexible with their sales price)
• Send mailers to people facing foreclosure
• Target people who own vacant homes – these are almost always ripe for purchasing at a discount
• Target people who are dealing with financial chaos of any sort

(Custom templates included)

• Send ads/mailers/business cards to Credit Repair Agencies & Credit Counselors
• Target HUD/VA Foreclosures
• Purchase leads lists of folks who inherited homes
• Send mailers to people arrested for violent crimes (going to prison for a long time)
• Send Mailers/ads/business cards to Realtors
• Send mailers to employees who have been laid off (ie “corporate downsizing” in the news)
• Networking with other investors
• Locate the list of section 8 approved properties—send mailers to the owners
• Post Newspaper classified ads: We Buys houses

• Send mailers to Properties with liens: Mechanics Liens, HOA Liens, Tax Liens

• Contact salespeople at new home subdivisions (their clients will want to sell their OLD houses) or place a sign near new home subdivisions that say “Sell Your House Fast” with your phone number. Often times, these new owners will be desperate to sell their old houses ASAP.
• Contact mortgage companies; they may know of people wanting to sell their old house/last house
• Hire bird dogs (sometimes even through craigslist “help wanted” ads)
• Send mailers to Bankruptcy court listings
• Send advertisements, business cards to Accountants and CPA Firms: They have clients with financial problems where an investor can be of help.
• Send ads, mailers, business cards to real estate attorneys
• Advertise “We Buy Houses” using Apparel with Logos: Hats, T-Shirts, Golf Shirts,
• Send to anyone getting their car repossessed: If the car is going the house isn’t far behind.
• Send ads, business cards to carpet cleaners: Many of their customers are preparing a house for sale.
• Send mailers to charitable groups/churches: They frequently receive gifts of real estate, but they’d rather have the cash.
• Send ads, business cards to City & County Inspectors: Code violations and red tags. (If you develop a reputation of buying distressed properties and improving them, you become an asset to the community)
• Place ads on boards at Nursing & Retirement Homes: Frequently residents need to sell a house.
• Consider placing Door Hangers on target properties: You can also use pre-printed post-it notes to leave messages at target properties. Be sure to advertise on both sides, you can even sell the backside and recover your advertising cost!
• Send mailers to addresses of people having Garage Sales: Are they moving?
• Send mailers to Hair Salons/Barbers: These places are social hubs – lots of talking going on during haircuts
• Send mailers, ads, business cards to Insurance Brokers: Policy changes from owner occupant to the landlord or vacant house coverage.
• Recruit Mail Carriers to notify you of vacant properties
• Send mailers to owners of multiple properties (target them to offload portfolios)
• Post advertisement in PennySaver type papers: “We Want to Buy Your Property”

• Send mailers to water, gas, and electric company shut off lists
• Or, just buy leads from:

                   DataTree (check out the video tutorial in this post)

                   AgentPro247

                   ListSource

                   MelissaData

Real Estate Wholesaling Through A Double Close

When we talk about wholesaling real estate through a double close, it’s very similar to the process of closing through an assignment — except it has much fewer drawbacks.

With a double close, you (as the wholesaler), sell the property to an investor-buyer, and the investor-buyer pays for the transaction between you and the motivated seller.

Let’s use the same numbers as the example above.

Say a property owner agrees to sell for a price of $25,000 and you market it for sale at a price of $30,000.

When the buyer agrees to pay $30,000 for it, the main difference is that you send a new purchase agreement to the buyer, between you and them (the original property owner is not listed on this contract).

Once this new agreement is signed by you and the new buyer, you send both the purchase agreement between you and the new buyer AND the original purchase agreement between you and the original seller to the title company, so they can process the closing.

If you’re working with a good title company (one that understands how this type of transaction works), they will schedule both closings to occur back-to-back, on the same day — and this is where we get the name “double closing”.

To be abundantly clear, you have in place:

Purchase Agreement #1: Between the original seller and you for $25,000 (A-B).

Purchase Agreement #2: Between you and the new buyer for $30,000 (B-C).

You send both fully executed purchase agreements to the title company at the same time, and if the title company is investor-friendly (and not all title companies are), they shouldn’t have an issue conducting a transaction where they use the funds of the buyer, to pay off the seller AND send the difference to you.

So, in our example, when you meet with the buyer first at closing. They will wire (or bring a cashier’s check for) $30,000 to fund the deal.

After all the documents are signed by all three parties, the title company will use the buyer’s funds to complete two transactions:

Transaction #1 (A-B): The title company uses the #30,000 funds in escrow to issue the seller a check for $25,000.

Transaction #2 (B-C): The title company issues a second check for $5,000 and pays this difference to you.

Note:

3 Major Benefits of Wholesaling Through a Double Close

In my opinion, wholesaling real estate through a double close is the overall best way to conduct this business, and here are three major reasons why:

1. It’s Legal!

With a double close, you aren’t likely to run into the same legal issues (but as you know, I’m not a lawyer, so always check with them and not me).

You are actually purchasing the property from the motivated seller.

Sure, you may only be the for 2 minutes while you’re at the closing table, but when you become the actual owner at some point during the process, your intent is true to what the purchase agreement says.

And of course, when you sell the property, you’re selling a property you actually own, so the issue of functioning as a real estate agent without a license isn’t nearly as strong of a case.

I’m always going to encourage all wholesalers to get their real estate license because if our legitimate occupation is the buying and selling of real estate, it will only help and not harm us.

2. You Get All of The Benefits of Assignments

With wholesaling through a double close, it has all of the same benefits as assignments:

You still won’t have to use any of your own cash to acquire the property.

If you can’t find a buyer, you can back out of the deal with very little damage (as long as you set up your purchase agreement correctly).

You can build up to doing a lot of deals quickly.

3. You Don’t Have to Disclose How Much Money You Made to Your Buyer

Unlike assignments, you have the added benefit of

You can make $5,000, $10,000, or even $100,000, and the buyer will never know. This keeps things a lot cleaner and gives a neutral ground for negotiations.

Real Estate Wholesaling Through A Traditional Close

The final method to conduct business as a real estate wholesaler is to simply buy a property, close on it, then market it for sale.

When wholesaling real estate, this method of closing requires a lot of working capital (i.e. – cash) on hand, but it also gives you the most control over the process.

Let’s go back to the example we used above …

If there is a seller that agrees to sell their property for $25,000, with a traditional close, you’d simply need to have the cash to close on it yourself, and then turn around and market it for sale at $32,000.

Once you had the buyer at $30,000, you would merely close a second time, 100% independent from the original transaction with the original seller.

Benefits of Wholesaling Through a Traditional Close

When you buy a property and close it the traditional way, it’s your property, so you can literally do whatever you want with it.

You can show it anytime. No one can accuse you of breaking the law for selling your own property. You never have to worry about the buyer knowing much you paid for it – it’s literally the best-case scenario.

How to Analyze Deals as a Real Estate Wholesaler

Now, once you have a motivated seller lead, how do you run your numbers and come up with your offer? How do you determine how much of a discount you need and how much you could ultimately end up selling the property for?

Well, it all depends on what the exit strategy is for the property. As a wholesaler, typically you’ll have two different kinds of buyers: rehabbers (also known as fix-and-flippers) and buy-and-hold investors (or “landlords”).

Let’s dive into how to approach each scenario.

Analyzing Flip Properties

When rehabbers run their numbers, they typically use a rule of thumb known as the 70% Rule.

Essentially the formula looks like this:

Maximum Available Offer = Market Value * 70% – Rehab Costs

Let’s say a property has a market value (the price it could sell with a realtor) of $100,000. You multiply it by 70% in order to ensure your profit margin and then subtract your estimated rehab costs (the amount of money needed to make the property as financially valuable as possible).

We’ll go in detail on estimating rehab costs in a moment, but for now, let’s just say the rehab costs are $50,000. Your analysis would look like:

$100,000 *.70 = $70,000 – $50,000 in rehab = $20,000 offer.

So as a house flipper the maximum you could spend on this property is $20,000…but what about wholesalers?

If we need to sell this property (at most) for $20,000 in order for it to work for our buyers, then obviously we need to get the property for even cheaper.

So wholesalers, use what’s known as the , which is the exact same formula above, only we take out an additional 5% for our profit.

$100,000 *.65 = $65,000 – $50,000 in rehab = $15,000 offer.

Now, $15,000 is your MAXIMUM available offer, so you should aim to get the property cheaper if you can.

The cheaper you can get a deal, the more profit there is for you and, most importantly, the more profit there is for your end buyer.

When it comes to running the , the two hardest metrics to determine are:

The Market Value of the Property

The Estimated Rehab Costs

So, let’s dive into those for a moment.

How to Determine the Market Value of A Property

Here is a quick video where I show you how to use Zillow.com to run comps -or comparables to determine your market value.

Here’s the thing: Every market has a different set of rehab costs, and even within the same market, different contractors can have different prices and different opinions on what amount of work they need to do.

It’s unfortunate, as this makes estimating rehab costs one of the hardest aspects of being a real estate wholesaler.

If we ever lost money on a deal at Simple Wholesaling, it was because we underestimated the rehab costs.

They’re just extremely subjective. It’s a fact of life.

One time, I walked two potential buyers through one property at the same time and, for one, the estimated rehab costs came out as $15,000, while for the other, they were $25,000.

So … what do you do?

Well, for one, when you advertise a property. I suggest not putting out “exact” numbers for rehab costs. I’d instead supply a range, like “Estimated Rehab Costs between $15,000 – $25,000,” for example.

In terms of running your numbers to determine your MAO, simply use the highest rehab number available. That way, your end buyer has a lot of room for error.

Let’s revisit the example above: If our rehab costs were between $15,000 – $25,000, my formula would look like:

$100,000 *.65 = $65,000 – $25,000 in rehab = $40,000 MAO.

A Pro Tip

If you are not a contractor, or you invest somewhere that’s different than where you live, I have a pro tip on getting a gauge of the rehab costs for your market.

Here is what you do:

• Hire 3-5 contractors to come and give you bids on a potential deal. It might costs you $100 per bid (sometimes they’ll do them for free..but because you’re never going to use them to do the work, I’d keep it classy and pay them for their time).
• This $300-$500 investment will give you a huge insight into what estimated rehab costs are for your area.
• If one guy comes back high and another comes back low, you can generate an average of the five, per each line item on the bid that they submit to you (like X amount for windows, X amount for new tiles in the bathroom, X amount for kitchen cabinets etc).
• If you do this for 5-10 properties (I’d use the money you’re making from deals to pay for it), pretty soon, you’ll develop a feel for what rehab costs go for and you’ll be good to go.

The calculator investors use to determine the value of your wholesale deals (included):

(Wholesale and Pro Investor calculators included)

On Potential Rental Properties

Now if the potential deal you’re looking at is a rental property, running your numbers can be a bit tricky because your end buyers may approach their analysis in different ways.

In a perfect world, you’d be able to provide hard-fact metrics like the NOI and cap rate per each property. The problem, though, is that operating expenses vary from person to person. So, again, these numbers are subjective.

I’ve found that the best approach is to simply use a handful of guidelines to ensure you actually have a deal and then leave the rest to the discretion of the buyer.

I cannot tell you how many times I had buyers tell me our asking price was completely off, only for another buyer to call in with an offer 15 minutes later.

People desire different things when it comes to an investment property, so, as a wholesaler, you just need to make sure you have a deal and don’t sweat the small stuff.

The following guidelines can be used separately on their own, or collectively for a multi-angled approach.

The First Guideline: The 1-2% Rule

The first guideline I suggest you use when analyzing a rental property is called the 1-2% Rule.

This is a pretty simple concept:

Price * 1-2% = Gross Monthly Rent Amount

When talking to a motivated seller, first try and get them to give you a price they want for the property. Normally, this initial asking price won’t be anywhere close to how much you’d be willing to pay, but it gives you a starting point.

Let’s say they’re asking $50,000 (we’ll use numbers typical for Indianapolis because that’s where I worked when I was with Simple Wholesaling). The next thing you’ll need to determine is the monthly rent amount.

If the seller is another real estate investor and they already have it occupied, that makes things easier, as you can just use the rent that’s already in place (sometimes they may have lower or higher rents for the area, but it’s still a helpful starting point all the same).

If not, you’ll have to determine what other similar properties are renting for in the market.

Now, why it’s called the 1-2% rule is because depending on what market you’re in, you may be able to get 2% based on these calculations and, in others, you may only be able to get 1%.

I know out in the San Francisco Bay Area, people are happy to get 0.5%, so it all depends on where you invest.

For the sake of our example, we’ll use the 2% rule. Let’s say this property is able to rent for $850 per month.

Let’s run our calculation:

$50,000 * 0.02 = $1,000

Obviously, with the rental amount being $850, we’re close but not quite there yet. In order to determine what purchase price will give you the 2% Rule, simple divide the rent by 0.02:

$850 / 0.02 = $42,500

What this tells you is you need to get this property for at least $42,500 – repairs costs.

You’ll have to estimate your repair costs the same way as I mentioned previously, but rental properties are typically in better shape then flip properties.

In addition to repair costs, you also have to factor in closing costs and miscellaneous fees your buyer will face like inspections.

For the sake of our example, let’s say the repair costs are $20,000 and the miscellaneous fees are an additional $2,500.

$42,500 – $22,500 ($20,000 + $25,00) = $20,000.

Now, here is an insider trick: In my experience, when running numbers using the 2% rule, it’s helpful to give yourself an error buffer. So, if my MAO is looking like $20,000, immediately I drop it by 25%.

$20,000 * 0.25 = $5,000

$20,00 – $5,000 = $15,000 MAO

Again, I want to emphasize the importance of recognizing this as your MAXIMUM available offer: You should start your initial offer as low as possible and then try to seal the deal as far beneath this number as you can.

If it was me, my first offer would be around $5,000, and I’d see where it went from there.

The more conservative you can be as a wholesaler, the better.

The Second Guideline: Offer 25% of the Lowest Market Comps (Minus Repairs)

The second way you can approach determining your MAO for rental properties as a wholesaler is to simply pull an average of the lowest-priced comparables (on rental properties) around your property and then make your offer based on a general 25% discount.

If you aren’t a licensed real estate agent with MLS access, this approach can be a little tough, as I don’t know of a good way to filter rented single-family homes from the others on sites like Zillow or Redfin.

But, if you are a licensed Realtor (or befriend a real estate agent) and have MLS access, it’s not difficult at all. Alternatively, you might try to get some rental property comps from local property management companies.

Either way, let’s say out of a list of 10 recently sold rental properties within a 0.5-mile radius of the property I’m analyzing (with similar square footage and bed/bath ratio etc.), I select the four with the lowest prices.

The Third Guideline: A “Rough” Cash-on-Cash Return

The final option to running your numbers on a rental property as a real estate wholesaler is where you do your best to determine a cash-on-cash return, based on your own estimate rehab costs and expenses.

For a quick review on determining cash-on-cash returns, here’s the formula:

Cash on Cash Return = Net Operating Income/Total Cash Investment

Where you run into issues as a wholesaler on this approach is two-fold:

When Determining Your Expenses within Your Net Operating Income

When Determining Your Rehab Costs on Your Total Cash Investment

These numbers are going to be subjective to whoever is running them, so as a wholesaler, you always have to be ultra-conservative.

Pulling from the example above, let’s say there was a property for sale at $50,000 that is being rented out at $850 per month. Again, let’s say rehab is going to be $20,000 and additional closing and miscellaneous fees come out to $2,500.

To determine our total cash investment, we need to include all associated costs and fees needed to purchase the property, so it includes the purchase price as well as everything else.

With our example, our total cash investment would be:

$50,000 + $20,000 + $2,500 = $72,500

Since we already know our total monthly income is $850, our next step in determining the net operating income will be to figure out our total monthly expenses.

This is where, again, it becomes subjective.

Some people pay 10% of the rent amount to a property management company, while others manage the property themselves.

Some people set side more amount for CAPEX expenses (see the video above) while others are comfortable spending less because they have access to certain deals on labor costs. It all depends on each investor’s personal situation.

The 50% Rule

To determine expenses, there is a general rule of thumb called the 50% Rule that a lot of investors use: It states that roughly 50% of your monthly income will go to expenses after mortgage and insurance costs.

So, if our total monthly income is $850 and our buyer’s purchase the property for cash, the 50% rule would look like this:

$850 – $250 (taxes and insurance) = $600 * 0.50 = $300

Based on this, our monthly cash flow is $300 if the buyer pays cash for the property. To reiterate, though: We have to be extremely conservative as wholesalers!!

My suggestion would be to give yourself a $100 – $200 buffer at all times. In this situation, that means I’d run my further calculations based on a $200 net profit after expenses.

This way, the deal will work for almost any buyer.

Finally, to determine our cash-on-cash return, we take our annual cash flow ($200 * 12 months = $2,400) and divide it by our total cash investment of $72,500.

($2,400 / $72,500) * 100 (in order to make it a percentage) = 3.31 %

Obviously, this is a HORRIBLE return at a $50,000 asking price … but what exactly is a good return?

It really comes down to local knowledge of your specific market. If you’re investing in California, a cash-on-cash return could be as little as 5 – 8%, whereas in Indianapolis, out-of-state investors typically shot for 12% or higher. We used to sell to some local guys who wouldn’t look at anything under 14%.

If you’re new, I’d suggest gathering this information by talking to other local investors or asking your potential buyers directly, learning how they run their own numbers, and then simply running based on what they’re looking to make.

Based on our current example, if the goal is to have 12% as bare minimum cash-on-cash return, here is what we do:

$2,400 * 100 / 12 = $20,000

In order to provide a bare minimum of 12% for your buyers, you need to be able to sell it to them at $20,000.

If you want to make an average profit of $6,500, subtract $20,000 to determine your MAO:

$20,000 – $6,500 = $13,500 (MAO)

(Wholesale and Pro Investor calculators included)

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