The formula every wholesaler needs to know
Wholesale real estate has one core formula that determines whether a deal makes money:
Maximum Allowable Offer = ARV x 70% - Repair Costs
This is called the 70% Rule, and it's the foundation of every successful wholesale deal. Let's break down each piece.
ARV: After-Repair Value
ARV is what the property will be worth after it's fixed up. You estimate it by finding 3 comparable sales (comps) within a half-mile that sold in the last 6 months:
- Same bedroom/bath count (within 1)
- Similar square footage (within 20%)
- Same neighborhood or school district
- Renovated condition (not distressed sales)
Average the comp prices. That's your ARV. Texas Signals Pro pulls comps automatically from cash buyer transactions and CAD records — no MLS access required.
Rehab costs: the make-or-break number
Under-estimating rehab is the #1 reason wholesale deals fall apart. The buyer inspects, finds more damage than expected, and walks. Here's a quick reference:
| Roof replacement | $6,000–$12,000 |
| Full kitchen remodel | $12,000–$20,000 |
| Full bath remodel | $6,000–$10,000 |
| Flooring (full house) | $4,000–$8,000 |
| HVAC replacement | $5,000–$9,000 |
| Foundation repair | $5,000–$12,000 |
| Interior paint | $2,500–$5,000 |
Always add 10-15% contingency for unexpected costs. The Texas Signals Rehab Estimator has 25 line items across 7 categories — check what applies and adjust costs in seconds.
The 70% Rule in action
Let's say you find a pre-foreclosure in Houston:
- Comps suggest ARV of $280,000
- Needs new roof, kitchen, and paint: ~$35,000 in repairs
- MAO = $280,000 x 70% - $35,000 = $161,000
If the owner owes $140,000 on the mortgage, there's $21,000 of room for your assignment fee. You put it under contract at $145,000, assign to an end buyer at $157,000, and pocket a $12,000 fee — without ever owning the property.
When to adjust the percentage
- 65% rule — Distressed markets, major structural issues, or properties that will take 6+ months to sell. More conservative, more profit protection.
- 70% rule — Industry standard. Works in most Texas markets.
- 75% rule — Hot seller's markets where comps are rising and hold times are under 3 months. Less margin but more deals close.
Five calculators for every deal type
Texas Signals Pro includes five investment calculators on one tabbed page:
- Deal Analyzer — ARV from comps, MAO, and wholesale assignment fee
- Fix & Flip — Purchase + rehab + holding costs + sale = net profit and ROI
- Rental ROI — Monthly cash flow, cap rate, DSCR, and the 50% rule
- Rehab Estimator — 25 line items with adjustable costs and contingency
- 1% Rule — Quick rental screening + Section 8 target pricing
Every calculator lets you save, share, export to CSV, and generate a PDF report.
Try it yourself
The Deal Analyzer and Fix & Flip calculators are available without an account — try them now. Save your work, share pro formas, and track deals with a Pro subscription at $49/mo.