When finding a flip 70% guideline on a $200k house vs $800k

[Skip Gilliam]

Is this guideline standard practice across the board or does it change depending on the or neighborhood and area? Found a great candidate for a first flip 4600sq/ft. After Reno value should be in the $850,000 range 70%=$595,000 $100k Reno cost at least to get it up to the level it needs to be. $495k purchase price following the formula. Realistically probably the bottom price in this neighborhood will be $525k-$550k Am I missing something? worth doing the deal?

[Daniel Y.]

It is all relatively. 30% is a rule of thumb and think of some of the places that really want to shoot for that 30% rule. If you are dealing with a 100k ARV property. After purchase+rehab you made 30%, so you came out with 30k. But don't forget agent commission and closing cost when you sell, but even if ignore that, 30k...30k is still a lot of money, but look at all that work and risk.

Now look at your example. Doing a very rough estimate on my end, it will require you much more capital compared to the 100k ARV property, but if you use the 550k+100k rehab then take out closing cost wouldn't come out with well over 100k at the end? Most people dream of getting a 6 figure salary in a year. You could do it in less than a year, and maybe even twice.