Updated about 10 years ago on . Most recent reply
Flipping houses
Good morning BP I have been reading lots of information over the past few days and have a couple questions to ask. I have seen where if investing in a flip you should pay about 70% of the value of the home? Is this the resale price you think it will go for or the current value of the home? In regards to finance should I research getting a personal loan from a bank or what other methods are out there? I have some cash on hand but not very much. we have 401K and other savings methods that can be a resources just not sure how to go about.
All this is going on while we also determine if where going to put our current house on the market and a potential move to another county in MD.
Most Popular Reply
The 70% rule is the price you should pay for the house. It is 70% of the ARV (After Repair Value) based on comparibles. Compatibles are houses that sold in the area that are similar to the house you own. You should also know and make sure that you buy the house at 70% of the ARV minus repair and holding costs. So an example:
House will be worth 100K after rehab.
The house will need 20K in repairs.
Closing and holding costs will be 10K.
Your offer price should be 40K.
100K-20K-10K = offer price.