Jay from Houston

Me bout to tear up some tacos 🌮

The 70% Rule is a quick way investors decide if a flip deal has enough room for profit.

✅ The rule

An investor should pay no more than 70% of the ARV (After Repair Value) minus repairs.

Formula:
Max Offer (MAO) = (ARV × 0.70) − Repairs

Why it exists
That leftover 30% buffer is meant to cover:
closing costs + lender fees (hard money points/interest)
holding costs (taxes, insurance, utilities)
agent commissions + seller concessions
surprises during rehab
profit

Quick example

If a home will be worth $300,000 after repairs and needs $40,000 in work:

ARV × 0.70 = 300,000 × 0.70 = 210,000
210,000 − 40,000 = $170,000
✅ Max offer = $170,000

Important note

The 70% rule is a starting point, not a guarantee. In hot markets some investors use 75–80%, and in riskier deals they’ll drop to 65%.

Hard money is basically short-term real estate money used to buy or renovate a property fast — usually for investors, not traditional homeowners.

Here’s the simple version:

💰 What “hard money” means
A hard money loan is funded by a private lender (not a normal bank). The lender cares more about the deal + the property value than your W2 income.

🏚️ What it’s used for
Most common for:

Fix & flips

Buying distressed homes

Quick closings when a regular loan would be too slow

BRRRR deals (Buy, Rehab, Rent, Refinance, Repeat)

⏳ Why people use it
✅ Fast approval + fast funding
✅ Less paperwork than banks
✅ Can fund repairs in some cases
✅ Great when the property won’t qualify for FHA/conventional

⚠️ The catch
Hard money is more expensive:

Higher interest rate

Fees (“points”)

Short term (often 6–18 months)

You need a real exit plan (sell or refinance)

📌 Bottom line
Hard money is a tool to get the property, add value, then cash out or sell — it’s not meant to be held long-term.

Question: If you already own a home with lots of equity? What's stopping you from putting that equity to work and purchasing another home to own as a rental property to earn more equity instead of it sitting doing nothing if you don't plan on selling anyways??

“I want us to grow together” 🤣🤣🤣
Priscilla sells houses