Real Estate 70 Rule in House Flipping
The 70 percent rule is a calculation that helps real estate investors budget their costs. It helps them gauge potential profits, which determines if a property is worth the investment. The 70% rule formula also helps flippers narrow down property listing options.
Understanding the 70% Rule
The rule states an investor should pay no more than 70% of the After Repair Value (ARV) of a property, minus the cost of repairs and improvements. It allows you to ignore everything except the two most important numbers when evaluating a deal initially: the After Repair Value, and the estimated Repair Costs.
Property Flipping Timeline
- 30 – 45 days: to buy the property
- 1 month – 6 months: to rehab the property
- 1 – 3 months: to sell the property
Flipping a House in 30 Days
A 30-day flip is rare due to repairs or renovations needed and sale negotiations. However, with an ideal property and speedy work, it might be achievable. Cody Sperber is considered an extremely clever investor because he can show you how to flip a house, get paid and do this in less than 30 days.
Earnings and Potential
Making $100K annually from flipping houses is possible, but it’s dependent on the property value, repair costs, and how many flips you do each year. Many experts say you can flip houses for a living. ATTOM Data Solutions reported that the average flip netted the seller a gross profit of $67,902, a return of 41.3%.