What is the 70% Rule in House Flipping?
The 70 percent rule states that an investor should pay 70 percent of the after repair value (ARV) of a property minus the repairs needed. The ARV is what a home is worth after repairs.
Profit Margin and Income in House Flipping
Experienced flippers target 10 to 20 percent profit of the ARV. A 10 percent profit is low and 20 percent is considered a "home run". Flipped homes in 2021 sold for a median price of $267,000 with a gross profit of almost $67,000.
Tips and Strategies
Most flippers target $25,000 profit per flip or more. It’s recommended to have at least 20 percent cash on hand of the purchase price plus repairs before starting a flip to cover unexpected repairs and ensure profit. Staying on budget helps reach anticipated ROI. Careful repair and flip planning can lead to a lucrative project.
How to Calculate the 70% Rule?
The rule of 70 is a calculation to estimate the years to double an investment growing at a constant rate. It offers simple exponential growth management and aids in retirement planning.
Comparing 30% and 70% Rules in Real Estate
The rule of 70 allows quick, useful calculations and projections in making informed portfolio decisions in real estate. It aids in retirement planning and helps in determining doubling times for savings growth.