Are wholesalers not using the 70% rule anymore?

I have a wholesaler who sends me text every once in a while with a deal. So I call him up finally and discuss the property. I ask if he uses the 70% rule and he tells me that the rule doesn’t work anymore and he only allows a 20% return on wholesale deals to investors. Is that where it going nowadays?

70% works in some areas but like say where I’m based in Charlotte 80 to 85 is regular but that is a super hot market. You probably want find 70% in somewhere like Phoenix either. The US has such low inventory that it’s putting pressure on average Joe so much that he’s buying a 2/1 junker over avr for a nice area.

Yeah, depends on the area. in my home market, I usually use 70%, and typically use 65% to account for buyers using hard money on larger projects.

The market is so “hot” right now that many people are not accepting low offers if the property has been on the market for a short time.

Also there so many “institutional” buyers now - Like American Homes Rental that are buying up homes quickly at 85% of value or list price with quick close/cash offers.

Yeah dodd/frank has created a vacuum in the real estate market. Right now new construction should be in full swing driving the economy with it but it’s not because banks cannot lend to developers at a good enough rate. Also I’ve seen cities around me enforce demolition more than ever before. So really old ugly houses are getting torn down and turned to vacant lots. The result of both of these is a huge renters market and low inventory.

My magic formula is working for me. I start at 50% of value, then fine tune the offer by the condition. If it’s a rat infested tweaker den in the worst part of town, maybe down to 20%. If it’s a nice looking place and occupied with paying renters, up to 80%
And if I’m lucky, do some deals.

Lol that’s funny. Exactly how I do it. I dont have the high home values of CA so I rarely go below 30% though.