When you are buying properties you need to have a formula for buying.

A standard formula that investors around the country use is something like this.

ARV  X 70% - Repairs = MOST YOU CAN PAY

Lets break it down…

The ARV = After Repair Value.  This is what the home is worth when it will be all fixed up and ready to be sold.  You should always price your homes a little bit lower than the other homes on the market to help you get a quick sale.

X 70% = This will leave you room for error and also your big paycheck when the property is sold.  You want to get paid right?

- Repairs = Subtract out all of your estimated repairs.

Most You Can Pay = This is where you make your first offer.  This is the most you should pay for the property.

This will insure that you have properly budgeting repairs, profit and errors.

Depending on your flipping ability you may need to factor in some extra things like extra holding costs  = taxes, insurance and utilities depending upon how long it will take you depending upon your skill ability.

So when you hear people say buy homes .70 cents on the dollar you know what they mean.  Of course if you can get homes cheaper then you’re in better shape.

This isn’t a special formula but its what works.  You can adjust accordingly if you feel the need.

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