Fix-and-Flip 70% Rule Calculator
Apply the 70% rule to a flip: the maximum you should pay given the after-repair value, rehab budget and carrying costs.
How it works
Max offer = ARV × rule% − rehab − other costs · Built-in margin = ARV − max offer − rehab − other costs
The 70% rule is a fast screen flippers use to avoid overpaying. It says your all-in basis — purchase plus rehab plus carrying and selling costs — should leave a cushion of roughly 30% of the after-repair value, which covers profit plus the risk that the resale or the renovation misses budget. Because rehab and holding costs come out of that 70% envelope, a higher repair bill directly lowers the price you can afford to pay. Treat it as a starting filter, not a substitute for a full profit projection.
Worked example
A house will be worth $300,000 fixed up (ARV). 70% of ARV is $210,000. Subtract a $45,000 rehab and $15,000 of holding, closing and selling costs, and the most you should pay is $150,000. That leaves the roughly $90,000 gap between ARV and your all-in basis as combined margin and buffer.
Frequently asked questions
Why 70% and not 80%?
The 30% discount off ARV is meant to absorb selling costs, holding costs, financing and a profit margin all at once. In hot markets some investors stretch to 75%; in slower or riskier markets they drop to 65%. Adjust the rule percentage to match your market and risk tolerance.
Does the rule already include rehab?
No — the 70% figure is applied to ARV first, and then you subtract rehab and other costs from it. That is why a big renovation budget sharply reduces the maximum price you can offer.
Is the 70% rule enough to decide on a deal?
It is a screening tool, not a full analysis. Once a property passes the rule, run a detailed profit projection with real contractor bids, actual financing terms and current comparable sales before committing.
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Educational estimate, not financial or investment advice. Real returns depend on financing, local costs and market conditions.