How Cash Buyers Underwrite Wholesale Deals (Flipper, Landlord, BRRRR)

If you've been pricing your deals off the 70% rule and wondering why buyers keep saying the number doesn't work, this post is for you.

The 70% rule is a starting point. It's not how real cash buyers underwrite. A disciplined flipper isn't multiplying 0.70 by ARV and calling it a day - they're opening a spreadsheet that tracks every dollar they'll spend, every month of holding, every loan fee, and the profit they need to make it worth showing up.

If you don't understand their math, you're pricing blind. You'll either lose deals you could've won (because you thought they couldn't pay more) or tie up deals they'll never buy (because you thought 70% was the answer).

Here's how the four most common cash buyers actually run the numbers - and what that means for how you price.

The short version:

• Fix-and-flippers price backwards from ARV, subtracting rehab, holding costs (1-1.5% of ARV/month), selling costs (7-9%), and a 15-20% profit margin. Real max purchase is often ~44% of ARV, not 50%.
• Buy-and-hold landlords ignore ARV and price off rent. They solve for a 7-10% cap rate and a 10%+ cash-on-cash return.
• BRRRR investors need total all-in cost below 75-80% of ARV so they can refinance and pull their cash out. If your price leaves cash in the deal, they walk.

The 70% rule rolls buyer profit, holding costs, and closing costs into a single multiplier. It assumes a generic flipper, a generic timeline, and a generic market.

Real buyers aren't generic. They have:

• A specific cost of capital (what they pay in interest and fees to borrow the money - anywhere from 6% on a bank line to 14%+ on hard money)
• A specific timeline (a 3-month flipper and a 9-month flipper have very different holding cost stacks)
• A specific profit threshold (a $30K profit is fine for one buyer, an embarrassment for another)
• A specific strategy (flip, rent, BRRRR, portfolio fit)

A 70% price that works for a buyer with cheap capital and a fast timeline will fail for a buyer with expensive capital and a slow timeline - even on the same property. If your pricing treats all buyers the same, you're going to guess wrong roughly half the time.

Before we get into the weeds, here's the cheat sheet. Most cash buyers in your market fall into one of four categories:

Now the deep dive on each.

1. The Fix & Flip Investor

The flipper buys distressed, renovates in 3-6 months, and sells at ARV. Every month on the project is cash leaking out the door - insurance, utilities, loan payments, property tax - and every week of delay is a week of real costs.

Their underwriting:

A disciplined flipper wants at least 15-20% of ARV as profit after everything. On a $200K ARV flip, that's $30K-$40K left over. Below 15%, the risk isn't worth the effort - one bad surprise behind a wall and they're breakeven or worse. Above 25%, they'll fight hard for the deal and move quickly.

The hidden costs you're probably ignoring:

• Holding costs - roughly 1-1.5% of ARV per month. On a $200K ARV flip, that's $2,000-$3,000 per month. A 5-month project quietly costs $10K-$15K before anyone swings a hammer.
• Cost of capital - if they're using hard money (short-term loans from private lenders, usually 10-14% interest plus 2-4 points - upfront fees charged as a percentage of the loan), they'll eat 4-6% of the loan principal in fees and interest before they see a dime of profit.
• Selling costs - agent commission (5-6%), closing costs (1-2%), staging, photography. Another 7-9% of ARV gone at the end.

What this means for your pricing: If you price your deal as if the buyer has no holding costs and free capital, your "great deal" is a money-loser for them. A flipper looking at a $200K ARV with $40K rehab isn't paying $100K ($200K × 70% - $40K). They're doing:

That's a 44% of ARV price to the seller, not 50%. Expressed another way: a disciplined flipper's realistic max purchase on this deal is 44% of ARV - not 70%, not 50%. The 70% rule gave you a ceiling of $100K. Their P&L gives you their real ceiling of $88K. On a $200K deal, the difference between 44% and 50% is $12K - the exact size of a wholesale fee.

2. The Buy & Hold Landlord

This buyer isn't flipping. They're buying to rent. Their math is completely different - they don't care about ARV. They care about cash flow (monthly rent minus monthly expenses) and long-term appreciation.

Key metrics:

• Cap rate (capitalization rate - annual net operating income divided by purchase price). Most landlord buyers target 7-10% cap rates depending on the market and neighborhood class. Higher in B/C neighborhoods, lower in A neighborhoods.
• Cash-on-cash return (annual cash flow divided by the cash they put in). Landlords want 10%+ after financing.
• The 1% rule - a rough screen: monthly rent should be at least 1% of the all-in cost. A $100K all-in deal should rent for $1,000+/month to pencil.

The landlord's price ceiling is anchored to rent, not resale. If a property rents for $1,200/month and they want a 10% cap rate after expenses, they're working backwards from around $120K all-in - including rehab. If rehab is $40K, they're paying $80K max. Doesn't matter that the ARV is $180K.

This is why a deal that looks great to a flipper can be worthless to a landlord, and vice versa. If you're pitching a heavy-rehab flip opportunity to a buy-and-hold buyer, you're wasting both your time and theirs.

3. The BRRRR Investor

BRRRR (Buy, Rehab, Rent, Refinance, Repeat) is the hybrid. These buyers renovate like a flipper, rent like a landlord, then refinance out of their original purchase - pulling most or all of their cash back out to do the whole thing again on the next deal.

Their underwriting has two constraints stacked on top of each other:

1. The rental side - after refinance, the property has to cash flow. Lenders need DSCR (Debt Service Coverage Ratio - monthly rent divided by mortgage payment) above 1.2-1.3x to approve the long-term loan.
2. The refinance side - they need to refinance at 75-80% of ARV and have their total all-in cost below that number. If they can't pull their cash out, it's not a BRRRR - it's just a buy-and-hold with extra steps.

The BRRRR math:

On a $200K ARV property with $40K rehab and $5K holding:

• Max all-in: $150K
• Max purchase: $105K

If your asking price is above $105K, the BRRRR buyer leaves cash in the deal - which for them is the same as the strategy failing. They're not going to do it.

The BRRRR crowd is the hardest to sell an overpriced deal to. Their whole model is built on the refi math working. If the numbers don't pull their cash out, they walk. No emotion, no negotiation.

4. The Institutional Buyer

Large institutional buyers - regional operators running hundreds of doors, iBuyers, and portfolio funds - underwrite by portfolio rules, not individual deal emotion.

They care about:

• Buy box fit - specific zip codes, price bands, year built, lot size, square footage, bed/bath counts. If your property is outside their buy box, the price doesn't matter. They won't buy it at any number.
• IRR (Internal Rate of Return - a blended return metric across years of cash flow plus eventual sale). Targets are usually 12-18% over a 5-7 year hold.
• Scale economics - they have centralized property management, bulk renovation crews, and lower capital costs than individual landlords, so they can sometimes pay a bit more than a mom-and-pop buy-and-hold buyer for the exact same property.

What this means for you: institutional buyers are narrow but fast. If your property fits their box, they close quickly and cleanly. If it doesn't, they're a dead lead no matter how good the price looks.

When Rehouzd shows a high match score for a known institutional buyer, that's a signal the property is in their buy box. That's rare, and worth prioritizing in your outreach.

Regardless of strategy, every serious buyer is subtracting these from their max price:

When a buyer tells you "the number doesn't work," this stack is the reason. Not greed. Not bad-faith negotiation. Math.

Stop pricing to the 70% rule in isolation. Price to the buyer profile you're actually going to pitch.

Before you lock up a contract, ask:

1. Who's the likely end buyer for this property type in this zip code? Flipper, landlord, BRRRR, or institutional?
2. What does their math look like at your asking price, with realistic holding and capital costs baked in?
3. Is there enough profit left after those costs to make them actually move?

The Rehouzd investor buyer list tags every active buyer in your area by strategy (fix-and-flip, buy-and-hold, or BRRRR) and scores how well your specific deal matches their recent purchase history. A flip-focused buyer scoring high on your deal tells you the flipper math works in your zip code at your price point. Use it as a shortcut - instead of guessing who will buy your deal, look at the ranked list and see what strategies are actually active.

Combined with the tradeability score, you get a two-layer check: tradeability tells you whether your price is in range for the market, and the buyer list tells you whether the strategy mix supports that price. And because the whole analysis runs on mobile, you can check the buyer mix and tradeability before you leave the seller's driveway - not after you've already locked up a contract at the wrong number. If you want the deeper walk-through of how the AI pulls comps and rehab in seconds, see run your property analysis with AI.

Your buyer pitch changes based on who you're calling. Same property, different framing - because each buyer runs different math.

To a flipper - lead with ARV and rehab:

To a landlord - lead with rent and cap rate:

To a BRRRR investor - lead with all-in vs refinance number:

Same property. Same price. Three pitches. Each one framed around the metric that buyer actually runs. If you don't speak the language of the math, your pitch sounds like noise.

Rehouzd packages all three views into a shareable offering memorandum - one link that includes ARV, rehab, comps, and full Fix & Flip, Buy & Hold, and BRRRR underwriting side by side. Instead of rewriting the pitch three times for three buyer types, you send the link and let the buyer see their own math.

A buyer who's going to pass rarely says so directly. They show it in their questions. Learn the signals:

• They stress-test your rehab estimate in detail - they've run their own numbers and yours came up light. Expect a counter below your asking.
• They ask about recent comps outside your suggested radius - they think your ARV is inflated.
• They go silent after your first number and come back 24 hours later with an offer 15-20% lower - they ran their own underwriting and it doesn't match yours. Their number is probably closer to the truth than yours.
• They start asking about assignment vs double close - sometimes they're planning to reassign your deal themselves, which means your price is loose enough to leave wholesale spread on top. You could've asked more.

None of these are deal-killers. They're information. Adjust your pitch, sometimes adjust your asking, and keep moving.

Most wholesalers treat their buyers like a mystery box. You send a price, they say yes or no, and you have no idea why.

The wholesalers who close consistently stop treating buyers as a black box. They learn the math their buyers run, they price deals to fit that math, and they pitch using the language their buyers care about.

You don't need to become a flipper or a landlord to do this. You need to understand one thing: every buyer's "no" is a math problem you can diagnose. When you can diagnose it, you can either adjust your price, renegotiate with the seller, or pivot to a different buyer type whose math actually works on your deal.

That's the skill. Not finding more buyers. Understanding the buyers you already have.

Rehouzd gives you the buyer landscape for every deal - who's active, what strategy they run, and how well your deal matches their recent buying behavior. Run a property and see it for yourself.