We have analyzed 411 single-family properties across Hampton Roads in the last twelve months. We have closed three. The math behind that ratio is one rule, applied every time, without exceptions.
Maximum allowable offer equals seventy percent of after-repair value, minus the rehab cost. If a deal does not pencil at that ceiling, we do not chase it. We do not negotiate up. We move on.
What the 30 percent buffer actually pays for
The reason the rule works is not because seventy percent is a magic number. It works because the thirty percent gap absorbs every cost that does not show up in the purchase price. Hard money points and interest. Closing costs on both ends. Property taxes during the hold. Utilities during the renovation. Insurance. Realtor commission on exit. Title fees. Concessions if the buyer asks. Unknown punch list items at the inspection. The carry cost of a slow listing market.
Stack those line items honestly on a typical six-month flip and they consume roughly twenty to twenty-two percent of ARV. The remaining eight to ten percent is the profit. That is the deal.
If you buy at seventy-five percent of ARV instead of seventy, you do not lose five percent of profit. You lose all the profit. The buffer is not a margin. It is the entire margin.
What the rule looks like on a real Hampton Roads house
1442 E Tanners Creek Drive in Norfolk. 1,248 square feet, three bedrooms, built in 1974. We pulled comps that supported an ARV of $316,389. The renovation scope was heavy, calibrated to forty-five dollars per square foot, or roughly $56,000 in scope.
Apply the rule. 70 percent of $316,389 is $221,472. Subtract the $56,000 rehab. That gives a maximum offer of $165,472.
We bought it for $124,900.
The spread, after rehab, sits at $135,000 on a property where the buffer alone could absorb $40,000 of surprises and still leave us at our target. That is the kind of cushion we want before we commit capital.
Why we pass on most deals
Most properties in the seven Hampton Roads cities are listed at prices that work for owner-occupants and turnkey buyers. Those prices do not work for fix-and-flip math. The seller does not need to take a sixty-five percent of ARV offer. The retail buyer can stretch to ninety-five.
Our edge is not that we offer more. Our edge is that we walk away faster, ask the right question of the right seller, and stay in conversation only when the spread is there. Of the 411 we analyzed, ten are at LOI right now. Three are closed. The rest are noted and gone.
Investors who place capital with us see this discipline in every deal package. The rule is the same on a $130,000 Portsmouth ranch and a $400,000 Virginia Beach townhouse. Seventy percent of ARV minus rehab. No exceptions.