Buying & Selling Real Estate
Market News & Data
General Info
Real Estate Strategies

Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal



Real Estate Classifieds
Reviews & Feedback
Updated over 8 years ago on . Most recent reply
Why/how is it possible to buy at 70% ARV?
I'm admittedly brand new at this, but I'm trying to wrap my head around how you're supposed to buy rental property at 70% ARV (or maybe 80%) after repairs costs. I do understand how that's rather desirable, giving you better cashflow, an exit strategy, etc. But I wonder how it's possible, because what's a good deal for the buyer is a 30% left on the table for the seller, and I wouldn't think too many sellers are up for that.
Here's what I can come up with as to how deals like that could happen:
- The seller goes FSBO and doesn't have much clue, so underprices the property. (but I gather that most people do FSBO because they're trying to get top dollar, so they're more likely to actually overprice).
- The seller uses a realtor/MLS. In that case, I'd expect that at least the realtor will have a clue, and not price the property way low. I suppose there is the occasional distressed/desperate seller who's willing to accept 30% below list, but I suppose it's hard to tell from the listing. So how would you find those? Make a hundred lowball offers until one sticks?
- Properties that get sold outside of the public (MLS/zillow/craigslist) market. But again I don't quite see why people would sell for substantially less if they could get more in the open market?
- I guess the exception I can see are properties that need substantial repair before being sellable in the regular market, because regular buyers would shy away from them, not get financing, etc. I can see getting a substantial discount there, though even that may be limited somewhat now, since rehabbing/flipping properties seems to have become rather popular since the last bubble / HGTV, so I suppose there's competition there, too. Anyway, personally those feel like too much of a risk for me at this point, as I don't have any experience with hiring/supervising contractors etc, and I suppose doing this the regular remodeling / general contractor way, any potential profit would go to the GC rather than me.
So maybe I'm missing something, but it seems that for a newbie it's rather hard to get those kind of deals on properties? (And of course that makes some sense, too, because otherwise everybody would be doing it...)
Most Popular Reply

The 70% rule is one we typically apply to flips, not to rentals.
Also a seller isnt leaving 30% on the table. Work needs to be done to a property to achieve the higher price. There are areas where there are large price spreads between rehabbed and non-rehabbed properties, and this is where you will find a lot of flips taking place. There are other areas where the numbers can not be achieved and thus may not be an area good for flipping.
- Russell Brazil
- [email protected]
- (301) 893-4635
- Podcast Guest on Show #192
