If the purchase price is 100,000 and construction (remodel costs) are 50,000 then the ARV = 150,000. .65 of 150,000 = 97,500. So the .65 rule amount is 97,500 and the purchase price is 100,000 which is only 2,500 off from an acceptable number. This "rule" seems like a guideline, not a hard and fast rule.

What is the purpose of the 65% rule? Why 65%? Why not 70% or 50%? What is the logic behind it?

@Laaction

3 жыл бұрын

When the property gets finished you can take the loan to a bank and do a cash out refinance , the bank will put a new loan on the current ARV and give you a CHECK for 75% of the current ARV, so by staying under 65% of the ARV you will always be able to get a Cash out refinance, this will allow you to replenish how you funded the deal and put more money in your pocket for more deals

To make it easier just take the .65 and divide by the arv subtract your rehab= cost not to exceed

@happyfreeky

3 жыл бұрын

Uh, no. That would be 0.65/100000 = 0.0000065. And then subtracting rehab value would essentially give you negative 30,000. The owner would be paying you nearly $30K to take it off their hands

Thanks Doug

How do you determine construction cost? I am brand new.

@Scott-gm4eu

5 ай бұрын

get estimates.

@Scott-gm4eu

5 ай бұрын

and you have to decide what is necessary v. cosmetic and how much do you want to spend on cosmetics where you won't get much return if any, and if it's a rental, cosmetics are risky because tenants may damage or neglect things.

Late night homework 🥂