Key takeaways
- Maximum offer = (ARV × 70%) − repair costs.
- The 30% you leave behind covers holding, financing, selling costs, and profit.
- Stretch to 75% in hot markets; drop to 65% for heavy rehabs or shaky ARVs.
- It's a screen, not a guarantee — confirm with a full deal analysis and comps.
What is the 70% rule?
The 70% rule says a flipper should pay no more than 70% of a property's after-repair value (ARV) minus the repair costs. It's a five-second filter that caps your purchase price so there's room left for every cost between buying and selling — plus profit.
Worked example
Using the calculator's defaults — an ARV of $300,000 and $45,000 in repairs:
- 70% of ARV: $300,000 × 0.70 = $210,000
- Less repairs: $210,000 − $45,000 = $165,000
So $165,000 is the most you'd offer. The $90,000 gap to the ARV isn't profit — it absorbs agent commissions, closing costs on both ends, loan interest, insurance, and utilities while you hold.
When to adjust the percentage
| Use | When |
|---|---|
| 75% | Competitive markets, light rehabs, experienced crews |
| 70% | The standard starting point for most flips |
| 65% or lower | Uncertain ARVs, heavy rehabs, slower markets, high financing cost |
Flipping margins are thinner than they look: ATTOM's U.S. Home Flipping Report has pegged the typical gross flipping ROI around 25–30% in recent years — before holding and selling costs. See the ATTOM Home Flipping Report.
Frequently asked questions
What is the 70% rule?
Pay no more than 70% of a property’s after-repair value, minus the repair costs. It bakes in a cushion for costs and profit.
What is ARV?
After-repair value — what the property will be worth once renovations are complete, based on comparable sales of similar finished homes.
Does this include holding and selling costs?
Indirectly. The 30% buffer is meant to cover them plus profit. For a precise picture, run a full fix & flip analysis.
Is the 70% rule still realistic?
In hot, low-inventory markets, holding to 70% can mean losing every bid — many flippers there move to 75% and tighten their rehab and ARV estimates instead.
How do I estimate repairs?
Walk the property with a contractor or use a per-square-foot rehab estimate, then pad 10–20% for surprises behind the walls.
What if the ARV is wrong?
An inflated ARV is the #1 way flips lose money. Base it on recent sales of comparable finished homes, not list prices or optimism.