Having trouble applying the 70% rule

[Ralph Plumley]

Hey BP! It's my first post :O

I'm looking into doing a flip (also a first). I'm running numbers in my area, but I'm having a hard time believing I'll be able to purchase a place using the  70% rule. 

Here's an example: Say a remodeled 3br / 2ba in my area is selling for $250K. 70% would be $175K. Say $20K for upgrades and $5K for holding costs. That makes my offer $150K using the 70% rule. But most homes in this area are going for $180 - $220 (outdated designs / not remodeled). So, again, I have a hard time believing I'll get something under contract by offering the 70% rule.

Do you guys still find the 70% rule applicable?

Thanks!

Ralph

[Jeremy Pakalka]

@Ralph Plumley I don't think you will be able to apply the 70% rule in that area, based upon what you are saying. I would however make sure that you are buying on the low end closer to 180. The amount of rehab will be the factor that decides if it is a deal or not. It will be in your best interest to make sure you communicate your position to the seller and let them know why you are offering them a certain price.