The 70% Rule: How and When does it change?

[Drew Byrd]

The standard rule for investors is to buy 70 percent of the ARV, but I've heard that inventory affects this percentage. For example, low inventory in the market might justify closer to 80%, high inventory could mean something more like 50-60%. Is this true, and are the other variable that could change that 70% to something else? What's the best way to determine the proper percentage. I'm a wholesaler and the information is pertinent for me to make offers to my buyers.

[Jason D.]

I think the biggest factor that changes the rule is purchase price. If I'm buying a million dollar ARV property as a flip, 75-80% could be possibly. Conversely, a $100k ARV property would be a maximum of 70%, but ideally more in the 60-65% range.