Are everyone's Fix and flips meeting the 70% rule?

Question

Are fix and flip investors finding many deals that meet the 70% rule?

I come across many profitable flips but very fee meet  70% of arv minud repais and holding cost rules?

Anna Laud · Answer

@Colter Mann

Hi Colter!

I think that probably depends on the market you're looking in and price point. It's not uncommon still (at least in Indy) to find these deals in Class C areas (some Class B), but the closer you get to Class A and Class B (just historically speaking across the board) areas the % margin tends to go up in a lot of cases. Not so often (at least here) is anyone looking to go with a Class A or B area for flipping anyway- I just say that as it can make sense to get into higher % in some cases but that's very deal by deal based, and not usually a common 'rule')

There are a few areas that seem like they're booming right now and I've heard of people getting outbid on deals- which is driving purchase price up (significantly in some cases) which in turn changes the % instantly. I don't personally know the TX market too well, but this is one state I've heard of this happening in recently.

If you're looking in an area where gentrification has happened to a greater extent for example, some of these asking prices are being driven up from where they might have been not so long ago as sellers are seeing the changes and know there is more value to their property than there was originally thought. Combine that with an overall lack of inventory in a lot of areas, and then natural occurrence is an increase in overall asking prices that will change your 'all in' % accordingly.

The same thing seems to be happening in other areas where folks are getting the green light for continued working from home, and flocking from major metro areas with high costs of living, to areas where they are able to buy (while interest rates remain low) for the same amount of (in some cases) cheaper than rent- again driving up purchase price point and your % all in changing. So your question makes sense in a natural order of things as to what's going on in various markets.

So it can still be done, yes- I think it's just very market specific in a lot of cases.

Maybe expanding your search area a little bit would help and speaking with an agent in your area/these areas of investing interest, to truly get the best sense of accurate ARVs- they might even have other areas to suggest to you as well that could possibly get you closer to your 70% all in mark.

Hope that helps some!