Full Profit Projection Formula
Net Profit = ARV − Purchase − Rehab − Carrying (6% ARV) − Closing/Commissions (8% ARV)
If net profit is less than 15% of ARV, the deal needs renegotiation or needs to be passed.
Deal Walkthrough
| Line Item | Your Deal |
|---|---|
| After Repair Value (ARV) | |
| × Rule % (70% Rule) | % → $168,000 |
| − Estimated Rehab Cost | |
| = Maximum Allowable Offer (MAO) | $113,000 |
| Actual Purchase Price | |
| − Carrying Costs | % ARV → −$14,400 |
| − Closing + Commissions | % ARV → −$19,200 |
| = PROJECTED NET PROFIT | $43,400 |
| Profit as % of ARV | 18.1% PASS |
PLAY — this deal meets your minimum margin.
$43,400 profit is 18.1% of ARV (minimum 15%).