So you have a fixer-upper that you’d like to make a little money off of. You have your target market and ideas for what the cost should look like. But have you considered what your investment will be in the future? That’s where the 70 Rule can come in handy. Many real estate investors use The 70 Rule when flipping a house. This rule is a way to determine the cost of a flip and fix house in order to make money. So how does the 70 Rule apply to you and your sales? Let’s check out the reason behind the rule and why it is some investors’ standard protocol.
What’s the 70 Rule?
According to the 70 Rule, investors are required to pay the After Repair Value (ARV) of the property minus the repairs that are needed. After the repairs are completed, the value of the home increases and this value will be the selling point. The 70 Rule uses a series of estimates that determine how long it would take the country (America, for example) to double its Gross Domestic Product (GDP). If your country growth rate is 10%, the rule predicts the amount of time for the real GDP to double will be 7 years. The 70 Rule cuts out all unnecessary procedures to manage growth concepts. This gives the investor a ballpark time frame of how long they can expect an increase in growth in their flip and fix loans Denver home. If you reside in a region where the growth rate varies dramatically, this formula will not prove to be of good use.
If you have fix and flip loans for a Denver home that you are currently renovating, this rule can keep you informed on what other investors are doing and spending with their flip and fix homes. Without relying solely on the 70 Rule as an accurate determination, you must consider your state and country growth rate. These calculations are a great benefit to the cost of your flip and fix home. The ERC and ARV need to be accurate and honest before this rule can even be applied. If either of them proves to be inaccurate, you could be spending much more money than you intend and operating on undesirable borders. You will need to be in tune and up-to-date with your current market to effectively apply this rule.
Are you an investor looking for flip and fix loans for a Denver home? You need a lender with the most competitive an honest rates on the market. With many years under their belt, Bold Funding offers flexible rates and personalized loans that most banks can’t. Contact us today to get your loan application started!