I was wondering if anyone has some success rates using 70% ARV on REO’s versus using 80% ARV. I understand that as an investor the deal needs to be profitable, but I don’t quite understand if there is any concrete proof using 70% vs 80%. Any light you can shed on this matter would be helpful.
The % you pay depends on what your plans are for the property. If you want to buy and repair and resell with hard money then 70% of ARV less repair costs is all you want to pay. You will have carrying costs and cost overruns and sales expenses that will take a lions share of the gross profit. If you have your own money or can borrow funds cheaper than HML rates you can afford to pay more for the property.
If you plan on keeping the property as a rental you can afford to pay 80% and even more.