Southern California 70% rule
Hi all. I’ve learned about the 70% rule when purchasing a property to rehab from multiple sources. This was going to be the rule of thumb that I used when doing a quick analysis of a deal. While trying to expand my contact list of buyers, sellers, etc, I have come across a few wholesalers who have properties they are trying to sell to investors. The price they are currently offering the properties would mean that an investor would be purchasing at between 80%-85% of ARV (assuming their figures on repair costs and comps are accurate). On the one hand, I know they say that all wholesalers are not created equal and that you have to weed the good ones out from the ones who don’t really know what they are doing. But on the other hand, I have read somewhere else that it is not out of the norm for investors in Southern California to pay in the 80% range due to lack of deals and fierce competition. I would like to ask any investors in the area if they try and stick to the 70% rule, or if they find themselves paying more than they would like to. Is 80%-85% par for the course in our area when it comes to buying from wholesalers? Appreciate any feedback. Thanks all.