The 70% rule is a basic quick calculation to determine what the maximum price you should offer on a property should be. This calculation is made by times-ing the after repaired value (“ARV”) by 70% and then subtracting any repairs needed. This gives you a 30% margin to cover your profit, holding costs & closing costs. Many experienced investors tighten this number up to being 75%. A tighter 75% can sometimes be a more accurate calculation on houses with an ARV of $200K or more. If you plan to wholesale a property to another investor who will flip the property, we have also included a section where you can factor in your profit margin as a wholesaler.
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