House flipping question

2 Replies

@Jesse Collins

@Jesse Collins

After Renovation/Renovated Value

The 70% rule of thumb is so that you can recoup your equity. It's part of the brrr strategy/methodology. After your reno, you would cash out refi. Since you generally get a better rate with 25% down, you pull the other 75% out as cash. Now you have your purchase cash and your renovation cash all back in hand. I've always assume the 70% was a safety margin, appraiser having a different opinion, being able to pull out some extra cash to have a profit, whatever...