Real Estate & Mortgages

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After-Repair Value Rule (70%)

Max purchase price for a flip using the 70% rule.

Formula

O_{max} = 0.7\, ARV - C_r

Variables

O_{max}Max offer

ARVAfter-repair value

C_rRepair cost

Example

ARV=$300k, repairs=$40k: O_max = $170k

Did You Know?

House flippers use the 70% rule to leave room for costs and profit before making an offer.

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