Where does the 70% MAO comes from?


#1

Good evening.
I am a real estate investor. As of now,i am trying to wholesale. Success is on the way. I know it.
My question is to know why do buyers request properties at 70% ARV?
What is the logic behind it?
I appreciate your clarifications.


#2

Most investors expect to net as much as 20%, assuming it takes 10% to rehabilitate and close(brokerage)…
Assuming home is worth 200K(ARV) and they buy it from wholeseller at 140K. There is just 60K potential profit before anything. Making <10% net is not worth the time and trouble. Most people use loans to finance their project and interest rate is often stellar.


#3

It is all tied up to the point and fees HMLs charge borrowers,who are already in the hole before even starting the operation.