The 70% rule is the gold standard for calculating your maximum offer on a fix and flip property. Enter the After Repair Value and estimated repairs to see your maximum allowable offer.
Standard is 70%. Use 65% for risky markets, 75% in hot markets.
At this price, you have a $120,000 buffer for closing costs, holding costs, and profit.
The 70% rule is just the starting point. Use our full calculator to model financing, holding costs, and see your actual ROI.
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The 70% Rule is a quick formula used by real estate investors to determine the maximum price they should pay for an investment property. It ensures enough margin for profit and unexpected costs.
Multiply the After Repair Value by 70%, then subtract repair costs. The result is your Maximum Allowable Offer (MAO). The 30% buffer covers holding costs (2-5%), closing costs (6-10%), and profit (15%+).
MAO = (ARV × 0.70) - Repair CostsProperty ARV: $300,000. Repairs needed: $50,000. Calculation: ($300,000 × 0.70) - $50,000 = $160,000 MAO. If the seller wants $180,000, walk away—there's not enough margin.
Use 65% for: slow markets, unknown repair scope, rural areas, or first-time flippers. Use 75-80% for: hot markets where you can sell fast, properties needing minimal repairs, or when you have a buyer lined up.
The 70% rule is a quick formula to determine your maximum purchase price. It states: Max Offer = (ARV × 0.70) - Repair Costs. The 30% buffer covers closing costs, holding costs, and profit.
The 70% rule is a starting point, not a hard rule. In competitive markets, investors may go to 75-80% and accept lower margins. In slow markets, you might need 65% to account for longer holds.
The 30% margin typically covers: 3-5% buying closing costs, 3-5% selling closing costs, 5-10% holding costs (depending on hold time), and 10-15% profit margin.
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