70 percent rule, Any pros/cons and surprises good and bad?

General Real Estate Investing
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70 percent rule, Any pros/cons and surprises good and bad?

Account Closed
Arlington, TX · Member since 2017 · 12 posts · 1 vote
Good evening, I'm new to bigger pockets and real estate. I have no experience and have been reading books and listening to pod cast. I have a question as to the 70 Percent rule. How accurate is it? I know it is used as a guideline and is not set in stone but is there anything that has really deterred anyone from doing it or something that a beginner might miss or not know of? Any feed back or suggestions are greatly appreciate.
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  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    9y

    Hi @Account Closed . Welcome to BiggerPockets.

    The 70% rule is great if you can get it. In a hot hot market, you won't be able to get it. I live in a ridiculously fast-rising market, and 70% is out of the question. 110% is out of the question, many times. 

    Other markets have a different experience. I'm not familiar with the Arlington market, but I know areas of TX are hot and 70% is not a realistic number.

    If you're not familiar with your local market yet, try a local investor meetup and chat with investors about what they're seeing, price-wise. Go to the Events & Happenings Forum to see a list of events near you.

    [email protected]Podcast Guest on Show #261
    BiggerPockets
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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    Once you become a expert in your own market you will have a clearer picture of what is and is not appropriate. Biggest mistake beginners make is in not becoming 100% familiar with their market. Without that knowledge every investment will be nothing more than a crap shoot.

    You must know before you purchase what your property will sell for. Even then if the market turns during the reno a tight market can become a loss.

    Investing in real estate is high risk for the novice.

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  • Account Closed
    OP
    Arlington, TX · Member since 2017 · 12 posts · 1 vote
    9y
    Hello Mindy and Greg thank you for the feed back, this was very helpful. I will look into the local events then. There is so much information here. I didn't realize real estate was this complex.
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