Should the 70% rule be used in all areas?

[Matt Van Dyk]

Hi All,

This is my first post as I am new to this site. I'm not sure if this question has already been asked, but I live in Southern California where the median home price is $750,000.00. It seems that to purchase a home, after rehab costs, for 70% of the FMV, is unrealistic, even if I do the repairs myself, as I am a general contractor. Should the 70% rule be used in high end areas?

[Aaron Mazzrillo]

Great question. I have found when I deviate outside of so called rules, I tend to lose money. If you want a 10% profit on a 100K house, why would you settle for less on a $750K house? More risk buying something that will eat you alive in holding costs if things don't work out. At least with a junky little $100K house, you can always rent it and make it work... At least here in SoCal.