70% rule applying on buy and holds

[Jay Davis]

Hi all, I know that as a wholesaler, I am looking for properties that meet or are close to the 70% rule. However, I have been getting a lot of calls from sellers that have property with tenants in them. Most of them have tenants that are paying on time too. Some of them want to sell, but the spread doesn't come close to the 70% rule. My question is this. Do buy and hold investors care about the 70% rule as much? What other criteria does a wholesale deal have to meet to be attractive to a buy and hold investor?

[Mike H.]

Here's some things I would consider going above 70% LTV on.

1) No repairs needed. If it doesn't need any repairs at all, that is going to help. Then I can get traditional financing and not have to tack on rehab costs out of pocket too.

2) Area. There are a couple really good rental areas that I love getting a house in because its such an easy rental and should continue to be because of the school district and the convenience to where I live. Rental rates can support the higher LTVs so I don't mind doing that.

3) Cash flow. Maybe the LTV doesn't work as well as the cash flow does. And/or maybe all the key mechanicals (roof, hvac, bathrooms, kitchen) have all been updated so I know I won't have to touch/update anything major for awhile. That also has some value I'd be willing to go above 70% on.