Updated about 10 years ago on . Most recent reply
Forgoing the 70% rule
Hello BP community!
I am wondering if some of you make exceptions to the 70% rule in some cases. I have one in my sights and am in communication with the very motivated owner. Time is short for him and he has agreed to sell for the ank payoff, which in this case is 303K.
The place is upscale and immaculate, and repairs are under $8,000 and house could list in less than 2 weeks.
Comps in the immediate neighborhood dictate listing at $360-370.
The market is Northborough, MA and the absorption rate here is positive.
The 70% rule says I can't pay more than $252K for everything.
Do you make an exception here?
Thank you all in advance for sharing your experience.
Most Popular Reply
Goodie!! Numbers :)
303k purchase
365 sale leaves you with 62k
- realtor at 6% of sale = $40,100
- closing costs at ~5k = $35,100
- renovation at 8k (suspect) = $27,100
- taxes @ 500/month for 4 months = $25,100
- insurance @$150/month = $24,500
- mortgage payment @$1200/month (20% down, 4.25%) = $19,700
- utilities @ $250/month = $18,700
Skinny deal. You'll be out $65k at closing. Your 8k renovation budget could triple as soon as the simple floor replacement reveals mold in one of the bathrooms, etc. $18k is a good number on 80k flips in Florida. Way too skinny up here in MA.