Louise, a good rule that many rehabbers use is the 70% rule. Here is how it works:
* Take the ARV you determined based on the comps (lets call it $150,000)
* Take 70% of the ARV (150,000 * .70 = 105,000)
* Now determine how much money is needed in repairs to get the property in a condition to fetch the ARV price (for this example, lets say you determine the property needs 30,000 in repairs)
* Subtract the repair costs from your previous number (105,000 - 30,000 = 75,000)...that would be the max purchase price.
Now, that is a rule many rehabbers use but it will depend on your market. What is missing though is your profit...so you need to subtract whatever you want to make on the deal. If you want to make 5,000 you need to put the property under-contract for 70,000.
Please keep in mind I simplified this quite a bit and every market is different. You need to find out what investors are looking for in your area.
Here is a great article about the 70% rule that explains it better than I just did:
Flipping Math
