WHAT YOU NEED TO KNOW AS A FIX-AND-FLIP INVESTOR
by Matthew Schlegel, Temple View Capital
should pay no more than 70% of the after repair value (ARV), minus the repair costs. This calculation factors in wiggle room for any other miscellaneous expenses that will inevitably pop up during the renova- tion process. Of course, part of applying such a framework stems from a clear understanding of the market and property value, which comes with experience. Calculating an accurate ARV and repair costs will result in a
or real estate investors, fixing and flipping property is an
CALCULATINGYOUR GAINS More of a guideline than an actual rule, the “70% Rule” in real estate provides investors with a framework for how to calculate the spending cap for an investment property. Overpaying for a property, in addi- tion to repair costs, will only lead to thinner margins, therefore knowing what to offer can make or break your gains down the road. The “70% Rule” suggests that an investor
attractive way to diversify their port- folio and make a relatively fast profit off a property. There are certainly various advan- tages to fixing and flipping, as there are pitfalls to also be wary of, espe- cially as a first-time flipper. In this piece, we’re going to explore how to maximize tax benefits and what mistakes to avoid that might cost you more money.
32 | think realty magazine :: september 2021
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