Flipper/Rehabber 路 Okeechobee, FL 路 Member since 2020 路 41 posts 路 8 votes
Looking for a little clarity on the 70% rule when flipping. Everything I've read or watched about yet subject states buying at 70% below ARV then subtracting rehab cost equals your purchase price. Others state the same but also subtract the profit you'd like to make. Which is correct 馃 if we are already buying at 70% below ARV is this not our build in profit?
There is no useful "average", and you are dealing with two distinct parts -- the rehab and the resale. The rehab time depends entirely on what a particular project needs, who is doing the work, and are the resources avail (skilled labor, materials, money) . The buyer demand in the market you are working in determines the other part (the "after rehab sales process"). Currently (at least in my area) the market is starting to cool down -- houses were selling in hours a year ago, and now they are taking days/weeks. Before Covid (and the insanely low interest rates) they were taking months. Part of that is people listing for more than the property will appraise for, part is buyers getting nervous.
As far as rehabbing, remember that when you watch HGTV shows, half of it is faked, the other half is untrue, and none of it shows the true time schedule (if you order and prefabricate materials for two weeks, but do the install on camera in a day, did the project take 2 weeks, or 1 day?).