The 70% Rule in House Flipping, Explained

Real Talk: Is That Home Really Worth Flipping? 🚧

Happy September, everyone!

Let's talk stats. According to FloridaRealtors®, last quarter saw a 1.9 months supply of inventory, compared to the same quarter last year at only 1.1 months. We are observing inventory on the rise, which means a shifting market. We as a team are always striving to give you the most up-to-date information. Tune into Matthew Patterson's radio show, "Real Estate Exposed" (WCCF News Radio 100.9 FM / 1580 AM), for in-depth market discussions.

The September edition of our newsletter offers local market statistics, team news, an article explaining the 70% rule of house flipping, this month's featured property, and MORE! Please enjoy.

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Our Team at The Patterson Group


August 2022 Charlotte County Market

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Cindy A. | August 2022


The 70% Rule in House Flipping, Explained

Savannah Sher | September 2, 2022

In the world of house flipping, there is a common adage that many in the business live by when it comes to determining their potential profit margins. Known as the 70 percent rule, this guideline can play an important role in the success or failure of your flip. Many real estate investors use the 70 percent rule to determine if a house is worth the time and money it would take to flip. The basic principle is that a flipper should never buy a home for more than 70 percent of its after-repair value (ARV) while also factoring in the cost of renovations.

In this article, we’ll explain how the 70 percent rule works, offer tips for determining a home’s ARV, and outline exceptions to this popular guideline.


What is the 70% rule in house flipping?

How does the 70 percent rule work in practice? In order to use it, you’ll have to do some simple calculations. The equation is: “After-repair value (ARV) ✕ .70 − Estimated repair costs = Maximum buying price.

So, for example, if you estimate that a home’s ARV is $500,000, you would multiply that amount by .70, resulting in a price of $350,000. You would then subtract the estimated price of renovations. If you predict that the house requires $50,000 in renovations, then your maximum purchase price would be $300,000. While this isn’t a hard and fast rule, it does provide an easy way to estimate your potential profit on a flip.

Continue reading article:


Steak, Potatoes, and Tomatoes with Quick Chimichurri

Total Time: 35 mins | Yields: 4 Servings

1 cup loosely packed fresh flat-leaf parsley leaves, roughly chopped (about 1/2 cup)
½ cup plus 3 tablespoons extra-virgin olive oil, divided
3 tablespoons fresh oregano leaves, roughly chopped (about 2 tablespoons)
2 tablespoons red wine vinegar
4 teaspoons kosher salt, divided
2 large garlic cloves, grated with a Microplane grater (about 1/2 teaspoon)
¼ teaspoon crushed red pepper
1 ½ pounds small golden potatoes, halved lengthwise (about 4 cups)
¾ teaspoon black pepper, divided
2 (1-pound) boneless strip steaks or 2 pounds hanger steaks
3 tablespoons canola oil
2 large (11-ounce) heirloom tomatoes or beefsteak tomatoes, cut into 1/2-inch-thick slices
Flaky sea salt, for garnish

Preheat oven to 450°F. Stir together parsley, 1/2 cup olive oil, oregano, vinegar, 1 teaspoon salt, garlic, and crushed red pepper in a small bowl until combined; set chimichurri aside.

Toss together potatoes, 1/4 teaspoon black pepper, 1 teaspoon salt, and remaining 3 tablespoons olive oil on a large rimmed baking sheet until evenly coated. Roast potatoes in preheated oven until crispy and fork tender, about 20 minutes, stirring once during final 5 minutes of roasting time. Remove from oven.

While potatoes roast, sprinkle steaks evenly with remaining 2 teaspoons salt and remaining 1/2 teaspoon black pepper. Heat canola oil in a large cast-iron skillet over high until oil smokes. Add steaks to skillet; reduce heat to medium-high, and cook, undisturbed, until steaks are evenly browned on bottoms, about 5 minutes. Flip steaks, and cook, undisturbed, until browned on other side, about 5 minutes. Place steaks upright on their sides in skillet; cook, rotating occasionally on their sides and holding upright, until a thermometer inserted in thickest portion of steak registers 130°F for medium-rare, or to desired degree of doneness, 5 to 10 minutes for strip steaks or about 2 minutes for hanger steaks. Transfer to a cutting board, and let rest 5 minutes.

Cut steaks into 1/2-inch-thick slices, and divide evenly among 4 plates. Arrange potatoes and tomatoes evenly on plates. Drizzle evenly with reserved chimichurri, and garnish with flaky sea salt.

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