Utilization Of The 70% Rule for Determining Flips

Do you know about the 70% rule? It's a method of determining whether a property is a good candidate for a flip. In short, according to the 70% rule, a buyer should not spend more than 70% of a property's after-repair value (ARV). If you're thinking of flipping a property, this is a rule you'll want to familiarize yourself with. This article will discuss the 70% rule and how to evaluate potential flips. We'll also touch on some general pros and cons of flipping properties.

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What Is The 70% Rule?

The 70% rule is a guideline that states that an investor should never pay more than 70% of the after-repair value (ARV) of a property. The ARV is the estimated value of a property after all repairs and renovations have been completed.

The 70% rule is a good way to ensure you don't overpay for a property and leave yourself enough room to profit after completing all repairs and renovations. It's also a good way to protect yourself from unexpected expenses that may come up during the renovation process.

How To Use The 70% Rule?

There are a lot of different rules and formulas that investors use when trying to determine whether a property is a good candidate for a flip. One of the most popular rules is called the 70% rule.

The 70% rule states that an investor should never pay more than 70% of a property's after-repair value (ARV). So, if a property is worth $100,000 after it has been rehabbed, an investor shouldn’t pay more than $70,000 for it.

This rule is a good starting point for investors, but it’s not always accurate. The ARV of a property can be difficult to determine, and other factors also need to be considered. But, if investors stick to the 70% rule, they will usually successfully flip properties.

What Are the Pros and Cons Of Using The 70% Rule?

There are both pros and cons to using the 70% rule when determining if a property is a good candidate for a flip. On the plus side, the 70% rule is a quick and easy way to see if a property has potential. It can also help you avoid overpaying for a property. On the downside, the 70% rule does not consider all the costs associated with flipping a property, so you could still lose money even if you follow the rule.

Dr. Roland: Changing the Landscape of Investments Through 70% Rule

Dr. Troy Roland is aware of the significance of using organizational change to improve the company and its people rather than exploiting them. He is a seasoned investor who places a premium on the 70% rule. Dr. Troy Roland received his Ed.D. from Pepperdine University. Dr. Troy Roland currently runs a real estate and financial services organization focused on investment property development.

Alternatives To The 70% Rule

There are a few alternatives to the 70% rule when determining flips. One popular method is the 50/30/20 rule. This rule states that 50% of your income should go towards essentials, 30% towards discretionary items, and 20% towards savings or debt repayment.

Another common alternative is the 80/20 rule, which says you should spend 80% of your income on necessities and save 20%. This may be a more realistic goal for some people, as saving a large chunk of your income can be difficult.

No matter your budgeting method, it is important to create a system that works for you and stick to it. If you're constantly overspending in one category, try setting stricter limits for yourself or look for ways to cut back in that area.

Conclusion

The 70% rule is a great guideline when determining whether to flip a property. By considering the after-repair value, the necessary repairs, and the current market value, you can make an informed decision on whether or not a particular property is worth flipping. Of course, there are other factors to consider, but the 70% rule is a good place to start.

About Us

Roland Realty/Financial is a licensed California based real estate (BRE: 01985792) firm that specializes in investment and residential properties. Founded by real estate broker, investor, author and scholar, Dr. Troy Roland, who has written several books and led investment groups on real estate based on thirty-year experience.

Dr. Roland’s real estate investments typically yield return on investments that exceed national average for return on investment due to his industry knowledge and utilization of noteworthy real estate evaluation techniques. Dr. Roland not only has practitioner experience in real estate as a licensed broker, he holds a Master of Business Administration (MBA) from the University of LaVerne, and a doctorate in organizational change from Pepperdine University.

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Dr. Roland’s book reveals his early experiences in making accessory dwelling units or room additions that launched him as an expert real estate investor. Perfect for anyone looking to get started investing in real estate!