Wholesaling is real estate's low-capital entry point: instead of buying a property, you get it under contract at a discount and then sell the contract itself to an investor who closes on the deal. You never own the house — you own the right to buy it, and you transfer that right for a fee. Done well, it requires strong negotiation and marketing skills rather than a large bank account.
The catch is that wholesaling only works when the numbers work for everyone: the seller, you, and the end buyer who ultimately renovates or rents the property. Understanding how your buyer thinks is the difference between contracts that assign quickly and contracts that die on the vine.
The Assignment Fee
Your paycheck in wholesaling is the assignment fee — the amount the end buyer pays to take over your contract. If you contract a house at $150,000 and assign it to a flipper for $160,000, your fee is $10,000.
For entry-level wholesalers, fees often land in the $3,000-$15,000 range per deal, though they vary widely with market, deal size, and how deep the discount is. Bigger fees are earned by finding bigger spreads — which means finding motivated sellers before anyone else does. Note that wholesaling is regulated differently from state to state; some states require a license or restrict how contracts can be marketed, so learn your local rules before you start.
The End-Buyer Buy Percentage: The 70% Rule
Your end buyer — usually a flipper — has a formula, and you need to work inside it. The classic standard is that a flipper wants to be all-in at about 70% of ARV (after-repair value) before accounting for rehab. In practice the formula looks like:
Maximum all-in = ARV x 70% − repair costs
If a house will be worth $300,000 fixed up and needs $40,000 of work, a classic flipper wants their total acquisition cost at or below $300,000 x 0.70 − $40,000 = $170,000. That $170,000 has to cover both your contract price with the seller and your assignment fee. Contract it at $160,000 and there is room for a $10,000 fee. Contract it at $172,000 and there is no deal — at least not with a buyer using the 70% standard.
The buy percentage flexes with the market and the buyer: some pay 75% or more in competitive markets or on high-priced homes; landlords buying to hold may use different math entirely. Know what your specific buyers actually pay.
Sanity-Checking the Buyer's Profit
Why 70%? The missing 30% is not all profit. A useful way to check your deal is to estimate the buyer's selling and holding percentage — a rough allowance for everything the flipper spends besides purchase and rehab, expressed as a share of ARV. That bucket includes:
- Financing costs on hard money or private loans
- Property taxes, insurance, and utilities during the hold
- Agent commissions and closing costs on the resale
Together these commonly eat roughly 10-15% of ARV. Subtract that from the 30% gross margin and the flipper's actual profit is closer to 15-20% of ARV. Run this check on every deal: if your numbers leave the end buyer with a skinny profit after realistic selling and holding costs, your contract price is too high or your fee expectation is too rich — and experienced buyers will see it immediately.
Underwrite Like Your Buyer
The fastest way to build credibility with cash buyers is to hand them deals that already pencil by their own math. The free Shouldirefi Deal Analyzer includes a Wholesale strategy where you can enter ARV, repairs, your contract price, and your target fee, and see the estimated spread from the end buyer's perspective. If the deal works on that screen, it is far more likely to work on the phone.
All figures are estimates for informational purposes only — not financial advice. Consult a qualified professional before making financial decisions.