How to find the ARV and our OFFER

By Julian Castle

Author

Julian Castle
August 09, 2023

Hey there,

Finding ARV and OUR MAO - Let's Do This!

STEP BY STEP

  1. Get the Lead! It comes into our CRM (Podio).

  2. Be a Friend! Talk and collect basic info.

  3. Find the Right Price! Run ARV/MAO to know what to offer.

  4. Offer with a Smile! Make the offer and show them we know our stuff.

  5. Don't Give Up! If they say no, keep trying.

Some Words to Know:

  • After Repair Value (ARV): The house's price after fixing.

  • MAX OFFER (MAO): The most we can offer to still make our money.

  • Rehab: Money needed to fix the house.

What's Comping? It's looking at other houses that sold near.

Websites for Free Help:

How to Know What to Offer:

  • Offer 66% of Zillow Zestimate.

  • Or take 3 recently sold house prices in the area, add them up, and divide by 3. That's our ARV.

How Much to Fix a House? (Depends on the market but usually…)

  • Lipstick Fix - $10 a square foot. Just paint and carpet.

  • Medium Fix - $20 a square foot. More work but not a teardown.

  • Big Mess - $25 a square foot. Hoarder houses, water leaks, new bathroom, everything.

Other Costs + Example:

Let's say we find a house that's worth $150,000 after all the repairs are done (ARV). It's a 1500 square foot home and needs more than just paint and carpet, so it's a Medium Fix.

Here's how the numbers work:

  • Realtor Commission/Closing Costs – 7%: That's $10,500 off the price.

  • Investor Profit - 15%: We want to make sure our investor friends are happy, so that's another $22,500. (Usually, 10-20% profit is good)

  • Rehab Needed - Medium Fix: At $20 a square foot for 1500 square feet, fixing costs $30,000.

  • Your Assignment - $$$: Let's say your fee is $12,000 this time.

So if we add up all the costs: $10,500 (Realtor) + $22,500 (Investor) + $30,000 (Rehab) + $12,000 (Your part) = $75,000

Our Maximum Offer (MAO) to the seller would be: $150,000 (the house's worth) - $75,000 (all our costs) = $75,000 MAO

So, that's how we do it! With the right steps and the right smiles, we turn a profit.

Happy house hunting!

Julian