Real estate investment can be a lucrative venture, but it's important to understand the rules of the game before you get started. One of the most important rules is the 70% rule, which states that your offer for a property should not exceed 70% of the value after repair (ARV) minus estimated repairs. This rule helps real estate investors find attractive investments, properly budget their costs, and ensure that they achieve substantial benefits throughout the process. At Real Estate Skills, we recommend focusing first on the ARV and then analyzing the available repair options.
To do this, you'll want to study market conditions, work with real estate professionals to get a more accurate resale estimate, and meet with contractors to determine how much repairs will cost and what renovations are needed. After analyzing some compensation and setting a conservative renovation budget, it's time to contact the real estate agent or real estate agent and make an offer on the house. The 70% rule is a general guideline that real estate investors must follow to get a 30% return on investment (ROI). Basically, the rule says that real estate investors should not pay more than 70% of the value after repair (ARV) of a property minus the cost of the repairs needed to renovate the home. These generally include title company fees, attorneys' fees, appraisal reports, realtor fees, etc. It's important to keep in mind that this is just a general rule and that there are other factors that can affect your offer price.
For example, if you're working with Rocket Mortgage, LLC, Rocket Homes Real Estate LLC, RockLoans Marketplace LLC (operating under the name Rocket Loans), Rocket Auto LLC and Rocket Money Inc., you may be able to negotiate a better deal. At Real Estate Skills, we believe that understanding the 70% rule is essential for successful real estate investment. By following this rule and working with experienced professionals, you can ensure that you make smart investments and maximize your ROI. As an expert in real estate investment, I highly recommend following the 70% rule when making offers on properties. This rule helps investors find attractive investments and properly budget their costs. It also ensures that they achieve substantial benefits throughout the process.
To make sure you're following this rule correctly, it's important to focus first on the ARV and then analyze available repair options. You'll also want to study market conditions and work with real estate professionals to get an accurate resale estimate. Additionally, meeting with contractors can help you determine how much repairs will cost and what renovations are needed. It's also important to remember that this is just a general guideline and there are other factors that can affect your offer price. For example, if you're working with certain companies like Rocket Mortgage or Rocket Homes Real Estate LLC, you may be able to negotiate a better deal.
Ultimately, understanding and following the 70% rule is essential for successful real estate investment.