A profitable venture known as “house flipping” entails purchasing a home, improving it, and then reselling it for a profit. But how can you tell whether a house is worth flipping? The 70 rule applies in this situation.
Real estate investors use a method known as the 70 rule to calculate the maximum price they should offer for a property based on its after-repair value (ARV). The maximum purchase price is limited to 70% of the ARV less the cost of repairs, according to the rule.
The maximum purchase price should be $170,000 (70% of $300,000 minus $50,000) if the ARV of a property is $300,000 and the projected cost of repairs is $50,000. After deducting the cost of maintenance and other expenses, this formula guarantees that investors can make a return.
But which house flipper has had the most success? Tarek El Moussa, a co-star of the HGTV program “Flip or Flop,” is one of the most well-known and successful house flippers. El Moussa has a net worth of $10 million and has successfully flipped over 300 homes.
If you’ve never flipped a house before, it’s crucial to conduct your research and have a well-thought-out plan before beginning. When flipping a house for the first time, you should do the following actions:
2. Locate a home: Look for a property that needs some work but has the potential to appreciate in value and is situated in a desirable area. 3. Evaluate the property: To decide if the property is worth flipping, get a professional inspection and calculate the cost of repairs. 4. Renovate the property: While keeping an eye on your budget, hire contractors to do the necessary repairs and renovations. 5. Staging and selling the property: After the improvements are finished, stage the home to appeal to potential purchasers and earn a profit.
In conclusion, the 70 rule is a crucial tool for real estate investors looking to establish the highest possible asking price for a property. In the cutthroat world of real estate investment, investors can improve their chances of success by adhering to this formula and conducting in-depth research.