From the course: How to Analyze a Wholesale Deal in Real Estate
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The 70% rule - Microsoft Excel Tutorial
From the course: How to Analyze a Wholesale Deal in Real Estate
The 70% rule
- Now for some of you with some background or if you've been studying wholesaling, you might have come across something called the 70% rule. This rule is a very simple rule that flip investors tend to follow. This is a rule that they use to account for holding costs like taxes, utilities, marketing costs, local commissions, et cetera. Basically, as a flip investor, they want to try to acquire their property at no more than 70% of the after repair value minus the cost of repairs. So let's say there's a house with an ARV of 100,000. 70% would make it 70,000. But let's say there's another 10,000 in repairs that's needed so the flip investor following this rule would want to pay no more than $60,000 for. So why does it matter to you? Well, if you wanted to sell to this potential buyer and you know what they're expecting, then that means you need to factor that in, alright. So for this home, if you wanted to make a $5,000 profit on this property and you know that at most they're willing to…
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