How to Flip Houses Using 5th Grade Math

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When you first get started learning how to flip houses, the majority of real estate investors will tell you that you absolutely,positively must have a complete understanding of the numbers. For those who are not math whizzes, this may sound a bit intimidating. When I first started flipping houses I thought this meant knowledge of advanced calculus, derivatives, complex algebra, perhaps even an advanced degree in algebraic geometry… Much to my pleasant surprise, none of this was true. The incredible thing is that in the flipping properties industry, you don’t have to know intense mathematical formulas. In fact, all you really need to know is fifth grade math.
For example, if you can understand complex numbers such as: 200,000 / 70% = 140,000 Then congrats, you have the requisite math skills to successfully flip houses!

One thing is definitely true though, if you go into any form of real estate investing without knowing your numbers cold…you will have a very short house flipping career.

Amazingly, the elementary math mentioned above includes the most basic and most important house flipping mathematical formula of all. Knowledge of this one formula will save you from many costly mistakes for sure. But more importantly it will also make you thousands of dollars throughout your real estate investing career. And all you have to do is understand what’s known as The 70% Rule.

The Most Important Number When Learning How to Flip Houses

Once you have determined the ARV, the next mathematical step in the house flipping process involves the vaunted 70% rule. The 70% Rule has been around for a long time in the real estate industry, as I certainly did not make it up. Someone far smarter than me figured this one out a long time ago.

The ARV by the way, is the “after repair value” of the home. This is what you hope to sell the property for prior to purchasing it.