The 70% Rule
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. If a home’s ARV is $150,000 and it needs $25,000 in repairs, then the 70 percent rule states an investor should pay $80,000 for the home. $150,000 x 70% = 105,000 – $25,000 = $80,000. Buying a house for $80,000 that will be worth $150,000 may seem like an awesome deal, but you have to remember all the costs involved in a fix and flip.
Profits from flipping real estate come from either buying low and selling high, or buying a house that needs repair and fixing it up before reselling it for a profit.
More than 200,000 houses in the United States were bought and the resold with the same 12-month period in 2017. That’s just under 6% of all the single-family homes and condominiums sold all year. The average net profit is between $20,000-$30,000 per property. However, most of the time YOUR time is not included in that number.
Is Flipping For You?
Flipping houses will likely be harder and more expensive than you ever imagined. And even if you get every detail right, changing market conditions could mean that every assumption you made at the beginning will be different at the end.
This 4-bedroom, 2-bath house was staged for a flipper who understands the value of making a vacant house look inviting and welcoming. People make buying decisions based upon emotional connections. Statistically, this house will sell faster and for more money than if left vacant.
Contact Premiere Stagers & Realty (608-345-9396) for information or showings for this house located just outside Madison, WI.