What is the max price to pay for a fix and flip?

[David Nielson]

There are two ways for you to calculate your MPP. 

The first is a much more detailed approach and requires you to estimate all your costs from the beginning to end of a project.

MPP Calculation = After Repair Value – Rehab Budget- Closing Costs – Holding Costs – Selling Costs – Financing Costs – Profit

The second method is a much shorter calculation that estimates holding, selling, and financing costs. This shorter calculation was once defined as the 70% Rule. Today the 70% rule is a myth. We have looked at thousands of loans and found that most flips are purchased between 85% – 88% ARV. So today's rule is the 85% Rule.

MPP 85% Rule Calculation= (After Repair Value x 85%) – Rehab Budget – Closing Costs