Higher ARV % For Competitive Markets

[Austin Joseph]

Hey everyone, 

I've always been under the impression that investors try to purchase properties for 70% of ARV (Example: $60k purchase, $10k repairs, $100k ARV).. but today I was listening to a podcast and the host said not to get too hung up on the ARV value because in his market (Phoenix) many cash buyers will settle for 80% or even 85% of ARV due to the competitiveness. Are Austin buyers running similar numbers or are they sticking to the 70% rule?

[Dustin P.]

You have to understand also it's market dependent.

In Phoenix, you can get a hard money loan at 12% with no points, or even less if you've been flipping for awhile.

Property taxes are super cheap, most are less than 1% of purchase price in a year

Also you should be able to get a realtor to list for 1% if they're getting repeat business from you

So when your acquisition costs, holding costs and selling costs are a lot lower, you can buy at a higher % of ARV and still have room to make money