The 70% Rule

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1/10: Want to flip houses like a pro?🏠 You need to know the 70% rule! It’s a simple formula that can help you avoid overpaying for a property. Here’s how it works.👇

2/10: The 70% rule says you should pay no more than 70% of the after-repair value (ARV) of a home minus the repair costs. The ARV is what the home could sell for after you fix it up.

3/10: For example, let’s say you find a fixer-upper that has an ARV of $200,000 and needs $40,000 in repairs. The 70% rule says you should pay no more than $100,000 for it. ($200,000 x .70 - $40,000)

4/10: Why 70%? Because it gives you enough room to cover your expenses and make a profit when you sell the home. Remember, flipping houses involves more than just buying and selling.

5/10: You also have to pay for closing costs, holding costs, taxes, commissions, and other fees. These can add up quickly and eat into your profit margin.

6/10: The 70% rule helps you avoid overpaying for a property that won’t give you enough return on your investment. It also helps you weed out homes that don’t match your budget or criteria.

7/10: But don’t rely on the 70% rule alone. It’s just a guideline, not a guarantee. You still need to do your homework and research the market conditions before making an offer.

8/10: You also need to work with real estate professionals and contractors who can help you estimate the ARV and repair costs accurately. And don’t forget to secure mortgage approval if you need financing.

9/10: Another tip is to use conservative numbers when doing your calculations. Plan for the worst-case scenario and expect some surprises along the way. Flipping houses can be risky and unpredictable.

10/10: The 70% rule is a great tool for house flippers, but it’s not enough by itself. You need to combine it with research, experience, and common sense. That’s how you flip houses like a pro!💯

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The 70% Rule

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