Tiny Toolkit

70% Rule Calculator

The 70% rule is the standard quick-filter that house flippers use to evaluate whether a deal is worth pursuing before spending time on a full analysis. Enter the after-repair value and estimated rehab cost to instantly see the maximum price you should pay, and an estimated profit at that price. The 30% margin is designed to cover holding costs, closing costs, and leave room for a profit — adjust for your market and risk tolerance.

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Frequently Asked Questions

What is the 70% rule in real estate?
The 70% rule says that a house flipper should pay no more than 70% of a property's after-repair value (ARV) minus the estimated rehab costs. The remaining 30% is meant to cover holding costs, closing costs, and profit margin.
What counts as rehab costs?
Rehab costs include all materials and labor to bring the property to sellable condition: renovation, repairs, permits, contractor fees, and contingency. They do not include holding costs (mortgage, taxes, insurance during the flip) or closing costs; those are covered by the 30% margin.
Should I always use exactly 70%?
The 70% is a guideline, not a rule. Experienced flippers in hot markets with fast sell times and low interest rates might go to 75%. Beginners or investors in slower markets should use 65% to build in more buffer. The right percentage depends on your market, financing cost, and experience level.
What if the maximum allowable offer is negative?
A negative MAO means the deal doesn't pencil out at current ARV and rehab cost estimates. Either the ARV needs to be higher (you may have underestimated), the rehab needs to be cheaper, or you need to pass on the deal and find a better one.

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Related Articles

How to Budget a House Flip Rehab

Underestimating rehab costs is the most common way fix-and-flip deals go wrong. Here's how to build a line-item budget and use the 70% rule to validate your offer.

6 min read