Key Takeaways
- A rent-to-price ratio below 0.6% almost guarantees negative cash flow with conventional financing.
- Never deploy 100% of savings into a single investment — reserves are non-negotiable.
- Renovation budgets must be tied to the ARV ceiling — spending beyond what the market rewards destroys returns.
- Unexpected costs should be absorbed by contingency reserves, not by expanding the renovation scope.
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Test Your Knowledge
1.In the "Dream Rental" scenario, what was the rent-to-price ratio?
2.What was the monthly cash flow on the "Dream" property?
3.What was the core error in the overimproved flip scenario?