The numbers

How to estimate a wholesaler's profit margin on a real estate deal

Estimating a wholesaler's profit margin involves subtracting all acquisition costs, holding costs, and disposition costs from the end buyer's purchase price. This calculation reveals the net profit, which is then divided by the total investment or revenue to derive a percentage.

October 13, 2026 · 3 min read

Start with your assignment fee or spread

For an assignment, your gross profit is simply the assignment fee agreed upon with your end buyer. If you're doing a double close, your gross profit is the difference between what your end buyer pays you and what you pay the original seller for the property.

This is your starting point. From this gross amount, you'll subtract all the direct and indirect costs that enable you to complete the transaction.

Factor in all acquisition costs

Acquisition costs include everything you spend to get the property under contract and ready to assign or sell. This includes lead generation expenses, skip tracing costs, initial due diligence fees, and any earnest money you put down.

These are the costs associated with finding the motivated seller and securing the deal. Every dollar spent to get to the point of a signed contract with the seller must be accounted for.

Account for transactional and closing costs

If you use transactional funding for a double close, the fees and interest associated with that funding are direct costs. Also, consider closing costs on both sides of a double close: title insurance, escrow fees, attorney fees, recording fees, and transfer taxes.

Even with an assignment, there might be nominal closing costs if you agree to cover certain items to facilitate the deal. These costs directly reduce your gross profit.

Do not forget holding costs (if any)

While wholesaling aims for quick turnovers, sometimes deals can take longer than expected. If you hold the property even for a few days in a double close, you might incur holding costs such as property taxes, insurance, and utilities, especially if it's a vacant property.

These costs, however small, erode your profit margin. Be realistic about the timeline and factor in potential holding costs, particularly if there are any anticipated delays.

Calculate net profit and margin

Once you've subtracted all acquisition, transactional, closing, and holding costs from your gross profit (assignment fee or spread), you'll arrive at your net profit for that specific deal. This is the actual cash in your pocket.

To estimate the profit margin as a percentage, you can divide your net profit by the end buyer's purchase price. For example, if your net profit is hypothetical $10,000 and the end buyer paid $100,000, your margin is 10%. This allows you to compare the efficiency of different deals.

Consider your time cost (opportunity cost)

While not a direct dollar-for-dollar expense in your books, the value of your time is a critical component of your true profit margin. How many hours did you spend on this deal, from lead acquisition to closing?

If a deal yields a high-dollar profit but took an excessive amount of your time, its effective hourly rate might be lower than a smaller, quicker deal. Understanding this helps you optimize your deal selection and process efficiency.

Questions people ask

What's the main difference in calculating profit margin for an assignment versus a double close?

For an assignment, your gross profit is the assignment fee. For a double close, your gross profit is the difference between your sale price to the end buyer and your purchase price from the original seller, before other expenses.

Should I include my marketing costs when estimating profit margin?

Yes, absolutely. All costs associated with acquiring the lead and getting the property under contract, including marketing and skip tracing, are part of your overall deal cost and reduce your net profit.

Why is it important to track my time even if it's not a cash expense?

Tracking your time helps you understand the true efficiency of your deals and allows you to make better decisions about which types of leads and properties to pursue. It's an opportunity cost metric.