Set an offer ceiling and test it
For a resale project, begin with supported resale proceeds and subtract every project cost and your required profit. The remainder is a preliminary purchase ceiling. If costs depend on purchase price or loan amount, iterate until the budget reconciles.
Rules such as “70% of ARV minus repairs” can screen opportunities quickly, but they do not replace a property-specific budget. Selling costs, financing, renovation intensity, and market conditions vary. A rule can be too generous on one deal and too restrictive on another.
Stress-test the exit. Lower the sale price, add repair costs, and extend the holding period. A deal that produces a small base-case profit can lose money when two ordinary problems happen together. Decide whether your capital and reserves can handle that result.
$180,000 resale minus $30,000 repairs, $5,000 contingency, $25,000 other costs, and $25,000 target profit gives a $95,000 ceiling. If resale falls to $170,000, profit falls to $15,000 at that purchase price.
Decision checklist
- Subtract project costs and required profit from supported proceeds.
- Recalculate costs that depend on price, loan size, or time.
- Test lower resale value, larger repairs, and a delayed exit together.
Check your understanding
What is the ceiling at $180,000 resale, $30,000 repairs, $5,000 contingency, $25,000 other costs, and $25,000 target profit?
Show the answer
$95,000. The inputs must still be verified, and price-dependent costs may require recalculation.
Your next action
Analyze base and downside cases. Write your maximum price and the evidence needed before committing.
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