If you've been involved in investing for a while - or if you've been doing plenty of research on flipping properties to make some cash - you've heard of the 70 percent rule. But what is it, and how do you figure out how much it is? What is the 70% Rule in Flipping Houses? The 70 percent rule says that an investor should pay 70 percent of a property's after-repair value, or ARV, minus the repairs necessary. 70% Rule: Examples So let's say a home's ARV is $200,000 and it needs $50,000 in repairs and upgrades to make it
Yesterday, we discussed the 70 percent rule as it applies to flipping houses. Check out that previous blog post if you aren't sure what the 70 percent rule is. Today's question is whether you should ever pay more than the 70 percent rule suggests. For example, some beginner investors think that it's OK to exceed the amount specified by the 70 percent rule in an appreciating market. After all, in a few months or by the time you finish your rehab, the After Repair Value should go up, right? Typically, but that's a big risk to take if it doesn't!