70% Rule in This Market?

[Timothy A.]

Hi everyone,

I have a question about what people think of the 70% rule in this market. I'm in Southern California and experiencing the same low inventory problems as many regions. Houses are getting picked off the MLS within hours and always over asking price. The market is flying and getting a house at list price seems to still be a good deal given how quickly we're moving. Given these conditions, how strict are folks sticking to the 70% rule of buying properties at 70% of ARV? In this market, it just seems like getting a house at 80% or 90% of ARV would still be a great deal. Of course this is a bit speculative with the assumption of prices continuing to increase at breakneck speeds.

The reason I ask is because I'm marketing to motivated sellers and many of them also understand the market. I've passed on a few houses just because I couldn't quite get down to the 70% mark, but I now feel like they would have still been good deals. Should I be passing on houses that only hit 80 or 90%? What are your thoughts?

[Maher Bateh]

I will be taking my Realtor's exam next week because in this market, every penny saved is essential. Also, having access to the MLS immediately goes along way in finding deals QUICKLY. I think 1k investment(license and MLS) and a little bit of time to prepare for the test is worth the savings on ALL future flips.