70% rule?

3 Replies

hi BP

I've been trying to wholesale homes in the state of NJ (not as easy it looks but I knew that, nothing is easy when it comes to make a life for yourself.) I was wondering do you guys use the 70% rule for every time you get a house to flip? or its just to give you a idea on how much you should offer.

After repair value * 70% - repairs = purchase price

However, I'm in a new market and this technique doesn't seem to work... Check out zillow to see what comps are selling for and determine your estimated repairs w 15-20k profit

70% gets me pretty close to my number. It allows me 20% profit on the amount of money I put up. I required that on the first $100,000. Anything over that I require 10% profit.

I am finding it difficult to find properties that meet the criteria except those that require a large amount of rehab compared to price of house.

Good Luck.


As @Drew Denham alluded to 70% does not work in every market. In my market it's more like 65% - repairs and even that depends on what part of town you are in. Check the sold comps on Zillow or your MLS and see what houses are selling for in your area.

Also the 70% rule came about because that's what Hardmoney and other lenders use to lend at 70% LTV.