Investor · Valparaiso, IN · Member since 2014 · 179 posts · 45 votes
I have been invited to join a mentorship group that potentially funds flips. My hangup is they seem to only do 70/30 deals and I think that’s more of a rarity in NWI than not. Anyone else have any input on that? I don’t want to waste my time (and some fees to join) if I’m correct in my thinking.
Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 128 posts · 39 votes
@John Leland they would fund the purchase and rehab, I find and manage / get the rehab done so sounds very similar. 70/30 meaning they only fund deals where the rehab and purchase price is no more than 70% of the arv.
I would agree with going at 70% of ARV. There is risk with flips right now and you have to take into account the entire cost, to figure if the project is worth doing.
No one is guaranteed that today's ARV will be the same ARV in 6 months. According to the National Association of Realtors the average flip takes 6 months from buying to closing. Any surprises can blow the budget. Taking longer to sell cuts into profits and any profits are taxed.
Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 128 posts · 39 votes
I have been invited to join a mentorship group that potentially funds flips. My hangup is they seem to only do 70/30 deals and I think that’s more of a rarity in NWI than not. Anyone else have any input on that? I don’t want to waste my time (and some fees to join) if I’m correct in my thinking.
How is the deal arranged. Who pays for the flip, who does the work, who makes the decisions, who decides to sell and for how much. Our Joint Venture are 50% / 50% with one party finding the property and managing the flip while the other provides the capital. There are all kinds of configurations, so I'm not quite clear what 70/30 entails.
Hi Mike, before you pay to join, it's worth knowing a fix and flip loan might get you there without a split. We can fund part of the purchase and most of the rehab with draws, and you keep the profit. Is the 70/30 their buy box or a profit split? And what purchase and ARV numbers are you seeing around Valparaiso?
@John Leland they would fund the purchase and rehab, I find and manage / get the rehab done so sounds very similar. 70/30 meaning they only fund deals where the rehab and purchase price is no more than 70% of the arv.
Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 128 posts · 39 votes
@John Leland they would fund the purchase and rehab, I find and manage / get the rehab done so sounds very similar. 70/30 meaning they only fund deals where the rehab and purchase price is no more than 70% of the arv.
I would agree with going at 70% of ARV. There is risk with flips right now and you have to take into account the entire cost, to figure if the project is worth doing.
No one is guaranteed that today's ARV will be the same ARV in 6 months. According to the National Association of Realtors the average flip takes 6 months from buying to closing. Any surprises can blow the budget. Taking longer to sell cuts into profits and any profits are taxed.
@John Leland I agree and that all makes sense. I just don’t see those margins come by very often in NWI so I’m wondering if others are seeing the same or something different.
@Nyisha Walton 70/30 is the purchase and rehab compared to the arv. I have done 14 flips and have used your style loan on several but looking more for not using my own funds now.
The 70% rule is a starting dial, not a law. The 30% has to cover holding, selling, financing and profit, and those costs don't shrink with the price, so lower-ARV markets usually need a tighter number and higher-ARV areas can work at 75–80%.
Before paying any fees, I'd ask the group for their last 10 funded deals in your area: ARV, purchase price, rehab and what each actually sold for. If most closed near 70%, the model is real there. If they can't show it, it's a filter, not a strategy.
You can also run your last few comps through ARV × % − repairs − fee and count how many deals you'd have to look at to find one that fits.
@Mike York with 14 flips behind you, I'd price the group against a straight lender before paying any fees. At 70% all-in, a $250K ARV means $175K in. After about 8% to sell and six months of interest on $175K at 11% (around $9.6K), profit lands near $45K. If the group takes half of that for their money, you're paying about $22K a deal for capital.
At your experience level, some lenders will do 90% of purchase and 100% of rehab, capped around 70 to 75% of ARV. Points and interest on that usually cost less than a profit split. The group makes more sense if it brings deal flow you can't find yourself.
With 14 flips under your belt I'm not sure you need to pay to join anything. There are lenders that will do up to 90% of purchase and 100% of rehab for experienced flippers, usually capped somewhere around 75% of ARV, which is a looser box than the group's 70% all-in. You'd still bring closing costs and a little skin in the game, but on NWI price points that's usually a lot less than giving up half the profit.