I HATE MATH... Im trying to figure out if the formula that i am using is wrong and which is more accurate...
So im trying to figure out how the 70% rule makes sense, by attempting to break down the numbers.
So the flipping formula is ARV-Repair costs- Closing/Holding costs-Profits= Max Offer
repair costs- 0
closing costs on both sides.. buying closing costs 5%
selling closing costs- agent- 3-6% (we'll say 4%)
title escrow- 1%
So purchase and selling costs together = 10%
Holding costs-Hard money mortgage- 8-12% (we'll use 12%)
property taxes 2%
so all of the holding costs = 15%.
So if i add closing and holding costs together thats = 25%
so 200k arv - 0 repair costs - 25% closing costs and holding costs - 25k profit = my max offer of 125k.
If i do ARV- repair costs- 70% that = 140k.
Did i mess up my numbers above? which one is more accurate