dose the 70 percent role still exists ?

[Abraham Lowy]

my story begins for about 7 mounts ago when  i had 200 k to invest .                         i was looking for a fix and flip deal so i asked my broker for that, and he brought a deal, claiming that that's should be a good deal ,     i bought it , and now now we finally getting finish with the rehabbing , and it looks like we will end up putting in like 80k.      so when i started making the calculation i see that ill not make to much money out of it .                                    lets do the numbers ..   i bought it for 140k  i put in in rehabbing 80k , i then paid 5k for someone to manage the construction,    property tax, water and sewer is like 5k ,  so we are now  everything together at 90k.          now the selling price should be at around 260k , lets deduct 6 percent realter fees for selling it is another 15k so i should be left with 15k.       so of course that deal didn't meet the 70 percent role  but my broker claims that the role dose not exists any more in this market .          so i would like to ask what you guys thing about that,               am i right that the role still exists or is my broker right that the role dose not exists anymore  ?

[Marty Boardman]

I agree with @J Scott about the 70% rule, I'm not a fan of it either.

It's unlikely that the seller would have accepted your offer of $97,000. That's 43K below their asking price. And 7 months ago when you bought this house it was a seller's market.

A simpler approach is to determine what's the minimum amount of profit you're willing to earn on the project? As a general rule, I want to make a minimum of 10% profit on the total amount invested in the deal. You purchased the property for 140K and have 90K in the rehab and holding costs for a net of 230K. That would be a 23K profit. 

Keep in mind, I said 10% as the minimum. I actually write my offers and/or bid on houses with a 15% target.

I think the 70% rule still exists, it's just that most investors don't follow it because if they did they wouldn't get their offers accepted.

You mentioned the selling price should be around 260K. When are you putting the house on the market Abraham?