Do you set your target on absolute terms or relative terms?

[Jorge Vazquez]

Do you want to set your target on absolute terms or relative terms?

Most investors want to buy properties based on the 70% rule. Some seasoned investors think in absolute terms rather than relative terms. They would consider a profit of $25,000 on a flip, even if it means that the purchase price is at 80% ARV – rehab. Some investors who borrow money target certain cash on cash returns after accounting for the leverage in the transaction. So it depends on you as an investor on how you approach the game. Do you want to set your target on absolute terms or relative terms?

From my experience, most flips usually sell for something in the range of 75% to 85% ARV minus rehab.