Investor real estate is probably the most important part of your business when it comes to investing. It is the life, blood of your business per say.

However, as real estate investors, we can’t just buy every property someone brings us. Although it may sound good coming from someone’s mouth, we must trust, but always verify, and if the numbers don’t make sense, we must have the courage to walk away from a deal. Remember that as a pinball player you earn money when you buy.

That being said, buying investment property requires skills. It’s like learning to ride a bike for the first time. Sure it’s going to be a little scary at first, but once you get the hang of it, you can probably do it with your eyes closed.

Let me explain how it works.

There is a formula that all investors follow to buy deals that are guaranteed to make you money when you buy. It is known as the rule of 70.

What is the rule of 70? The rule of 70 basically works like this. Let’s say you found a house worth $100k ARV – (After Repair Value) The maximum price you should offer to pay for this house would be $70k. (very simple math)

Take $100,000 ARV and multiply it by 0.70 or 70%, which equals $70,000. When you buy real estate as an investor at 70% or less FMV (fair market value), you are guaranteed a 30% safety net. Typically, if you’ve done your homework correctly, you can pocket 20% of that as profit, which is $20,000, and 10% toward your closing cost.

What if the property needs repairs? If the property is a distressed home, all you have to do is follow the same formula 70 rule minus the repairs.

As an investor, this is critical to your success, and in today’s real estate markets, you can find deals for less than 70 cents. In fact, you could get deals for as little as 0.30 to 0.50 cents on the dollar.

The deals are out there, you just need to know how and where to find them. If you stick to the Rule of 70 formula for selling property, you’ll never have a problem making money.

Remember, investor real estate requires persistence, patience, and the right education.