Will some post the 70% rule on flipping or already where I can find it.
ARV X .70 Minus All repairs, costs, etc.= Max Offer
@Graham Rushing . 70% rule = ARV * .7 - Renovation costs = Max purchase price
ARV = After repair value
ARV of a property = $300k
Repairs = $50K
Max offer = 300k * .7 - 50k = 160k
This is just a rule of thumb.
Thanks guys! That will be a big help in the future!
Can someone explain how to figure the % of ROI? For example I do the equations above with these numbers.
ARV = $99K repairs $25K
$99K * 0.70 = 69300 - 25000 = 44300
Say I do sell for the total asking price $99k
$99K - 44300 = $54700
What is the equation to figure my % for ROI?
I know the percentage on the money borrowed has to figure in somewhere right?
Based on the numbers above is it correct to say ROI is 123%
I won't post it again, but just a quick note; remember the 70% rule is a rule of thumb. It's not useless like the 2% rule. But don't take it as Gospel. On more expensive properties, you can settle for less, on really cheap properties, you'll need more. Sq. ft. for sq. ft. a roof costs the same, and you'll have less margin for mistakes and overages on cheap properties.
Read the Ultimate Beginner's Guide. If you don't understand the 70% concept, I'm sure there are plenty of additional, very important concepts you're missing.