AVR 70%

8 Replies

does the 70% AVR pretty much stay the same with all market value prices and same SQFT?

Example: 100K market value home 2000sqft and 300K market value 2000sqft. Numbers are way different!!!! Seems to much to cut on the higher priced homes for 70% equation. I live in Cali and prices are higher. Wondering if I'm missing something, or is it always between 70-80% minus repairs????

depends how high the monthly payments are

Sorry, I meant ARV......if my seller has the equity already below my high purchase price it's such a huge difference and repairs will not cost that much for just a 5-10k profit. If you follow the 70% ARV equation you might not get the contract because you asked for too much off the deal. Not sure if there is another way to look at it on higher market value homes.

Sorry, I meant ARV......if my seller has the equity already below my high purchase price it's such a huge difference and repairs will not cost that much for just a 5-10k profit. If you follow the 70% ARV equation you might not get the contract because you asked for too much off the deal. Not sure if there is another way to look at it on higher market value homes. Just don't want to miss something I'm overlooking and raise my ARV myself on a high priced home and lose my deal to an all cash buyer.

Hey Mike,

  Yes! the formula works in any market and in any area with single family homes.
70% of ARV - Repair costs gives you your maximum allowable offer (MAO) this formula determines the amount of hidden equity in your target single family home and will be your benchmark to see if you have a deal on your hands or not.




says the guy from Canada! I think aaron (a-a-ron!) mazrillo would be best to say. I'd be curious myself. 10% for profit say, on a $300k house is 40k compared to a house in Wisconsin at $10k profile ($100k house). I also have seen a number of houses sell fast around 80%-ARV. (but that is MLS & those who likely know exactly what they are doing).

10% on 300k is 30k .sorry, typo (I swear I am a math minor and computer science major).

Originally posted by @Pat McGrath :

says the guy from Canada! I think aaron (a-a-ron!) mazrillo would be best to say. I'd be curious myself. 10% for profit say, on a $300k house is 40k compared to a house in Wisconsin at $10k profile ($100k house). I also have seen a number of houses sell fast around 80%-ARV. (but that is MLS & those who likely know exactly what they are doing).

 Pat:

In this case, the guy from Canada is correct that 70% of ARV should leave margin for repair and and profit, provided the required repairs are not deep. My caveats on this would be:

a) know the local market and be absolutely certain of your exit price range; your expected carry and your rehab estimates;

b) for a first flip, especially if you are anticipating a 10% profit, I would look for 60% ARV to leave space in your numbers for your education.

Offering anything over 70% of calculated ARV means that you are not looking at the deal purely as an INVESTMENT for profit! It means that you are either getting emotionally attached to the idea of not letting a property get away, and/or your gambling demon has returned. From what I have read, many here at BP won't offer over 65% ARV.

As far as higher valued properties are concerned (meaning more dollars discounted and more dollars profit expected), the other side of the coin is the increased RISK you would be taking if your ARV doesn't pan out in the real world! Why risk that? Cheers...

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you