The 70% Rule is a general rule of thumb to see if a fix and flip deal is worth pursuing. It will help you quickly assess the maximum purchase price for a wholesale deal.
The 70% Rule in Flipping Houses states that an investor should not pay more than 70% of the After Repair Value, minus repairs, for a home to make enough money from the flip to be worth it. If a property is worth $200,000 after you fix it up, then the 70% Rule states that your offer should be $140,000 less any repairs you will need to put into the property.
This rule of thumb is to keep a rehabber from paying no more than 70% of the after repair value, minus any repair costs or and desired profit.
After Repair Value
Repairs Needed
Extra Profit Needed
Estimated Purchase Price
How you use the calculator is very simple.
Enter the After Repair Value of the home
Enter the amount of how much it will cost to repair the home
Add any extra profit you may need in the deal
After you have all of these put in, the calculator will give you the max dollar amount of how much you will want to offer for the property.
Always remember to negotiate. So start lower than this 70% Calculator number so you can negotiate your way up to the 70% number.
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