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A quick, easy and simple formula to use is The 70% Rule to help House Sellers determine the maximum price they can pay for a Fix-and-Sale Property in order to turn a profit.  The Rule is simply  a  way to determine a ballpark  Estimate how much you should pay for the property.  The Rule States that a Fix-and Sale Investor should pay 70% of the After Repair Value (ARV) for a property, minus the cost of necessary repairs; improvements, closing cost;   These costs could include Agent Commissions (if applicable) to Closing Costs, Title Inspections and any Hard Money Fees. The profit is what is left after all of the costs have been subtracted.  

The 70% Rule is  a  A Tool To Help Prevent Overpaying For An Investment Property.

As an Investor the last thing you want to do is Pay Too Much for the property and 70%  Rule can help you not do that-------Pay Too Much.

Example of The 70% Rule Estimate

$170,000 property ARV. If the property is in need of $40,000 in repairs, the 70% rule suggests that the maximum price an investor should pay would be $79,000.  Please  remember you could pay more or less depending on how fast the seller needs to sale.

Here’s the math:

• $170,000 (ARV) x 70% = $119,000
• $40,000 (cost of repairs) is subtracted from the $119,000 =
• $79,000 (total suggested offer price)

Necessary Adjustment For The 70% Rule

Some property buying location will require you to Decrease the 70% to 65% or Increase it to 75% from 70% because of the quality of the area you are buying in.  In other words, some areas will allow you to increase The 70% Rule To 75% and some will not.  For this reason you must be willing to be flexible and not get greedy.

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