Is $30,000.00 In Equity Enough???
Hello all,
I was wondering just how important the 70% FMV rule is to everyone. Lets say that there was a house that didnt meet that rule, but had $30k or $40k in equity, how many of you guys and how many investors in general would jump on a deal like this? I mean even though it doesn't meet that rule it still has soo much equity. Thanks , Tim[ Edited by HasSpoken on Date 11/12/2003 ]
It's all about risk and cost of capital. Real Estate Investment is all about percentages, not necessarily net $s of equity. Sure, if you have $280k laying around, you might want to risk it and and buy a house for that much that has $30-40k in equity. However, if it's only 10% equity, your holding costs and selling costs will quickly overrun your profits.
Sorry for my ignorance, but I am a newbie. Can you tell me what the 70% FMV rule is? Are there any other rules of thumb I should be made aware of? Thx!!
Hi HasSpoken,
This somewhat is a personal decision for everyone. I was just on another board today that the "Forum King" always lives and breathes by that 70% rule. However, he hesitantly shared with us that he buys outside of that ratio if the deal make sense to him. That the rule is simply something to guide yourself by.
Best of Success!
BAMZ
70% rule-purchase house @70% of full market value