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Updated almost 7 years ago on . Most recent reply
Am I being to conservative? 70% rule
Hi Everyone!
Complete newbie here working on closing my first deal. I'm looking to fix and flip. As I've been evaluating deals I'm trying to follow the 70% rule. My question is how strictly I should be doing this in the DFW market. Specifically in the areas I am farming the average DOM is 10 days or less. As I'm analyzing deals from whole sellers even using their ARV which I do not really trust it's not possible using the 70% rule so my main question is should I be less conservative considering the market I'm in?
To use just one of the properties I’m looking at as an example it’s AVR is around $165k and $25k in repairs putting my max offer around $90,500. Now if I just work off my desired profit of $20k and factor all cost in I can go up to $95k which is what I’ve offered after my low ball initial offer was rejected. I’m finding out seller wants $110k which just doesn’t leave enough meat on it from my perspective as a newbie investor. That’s fine if the numbers don’t work they don’t work but I’m wondering if a more experienced investor would go for this and settle for a lower profit.
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Instead of trying to force the numbers on a particular location....find the locations that fit the numbers. Find out where the majority of flips in your metro area are happening, see what the flippers are paying for them and selling them for...then copy them.
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