ARV

[Katie Rye]

Can someone please explain to me the 70% rule and specifically the numbers you are looking at? Thanks

[Zack Broaddus]

Once you've determined your ARV (using comparable sales within the last 6 months from Zillow, Redfin, Realtor.com, the MLS, etc.), you are going to take that number and multiply it by 0.7 (ARV= $100,000. $100,000 x 0.7 = $70,000). If you are wholesaling the house, this is what your buyer would be willing to pay for the house if it needed absolutely no work whatsoever. That said, you are going to have to factor your profit into that (you get the $100,000 ARV house for $65,000 and then sell it for $70,000). Most houses will need at least some repair, if not a lot, so you will also need to subtract that from your number (if it will cost $20,000 to get the house into shape, then $100,000 x 0.7 = $70,000 - $5,000 - $20,000 = $45,000). Now you know that you will have to get the house at $45,000 in order to move it to a 70% buyer and take home $5,000 for yourself. However, depending on your market, not all buyers will buy at 70%, for some it will be 65%, others 60%. If you are keeping this house for yourself, then ignore the wholesaling fee, and you could pay $50,000 for it. I hope this was helpful!