70% rule calculator (maximum offer)
The 70% rule says a flipper should pay no more than 70% of the after repair value (ARV) minus the cost of repairs. For a $250,000 ARV and $40,000 of repairs, that is $250,000 x 0.70 - $40,000 = $135,000.
Results
How does the 70% rule work?
Maximum offer = ARV x 70% - estimated repairs. ARV is what the house should sell for once fixed, based on recent sales of similar updated homes nearby. Repairs are your full rehab estimate.
The rule is fast because it needs only two numbers. That speed is its value when you are screening many leads; its weakness is that it hides the costs it is supposed to cover.
Worked example
With the example values, ARV is $250,000 and repairs are $40,000:
- $250,000 x 70% = $175,000
- $175,000 - $40,000 = $135,000 maximum offer
To check whether that offer really leaves a profit, put $135,000 into the fix and flip calculator with your actual loan, holding and selling costs.
How wholesalers use the rule
Wholesalers usually work backward from the 70% number, because it is roughly what a cash buyer will pay. The difference between that number and the wholesaler's contract price is the room for an assignment fee. The wholesale fee calculator does that math.
Frequently asked questions
Why 70%?
The 30% gap is meant to cover closing costs on both ends, holding costs, financing and the investor's profit, without itemizing them. It is a screening rule, not a law of the market, and many investors adjust it.
Should I use a different percentage?
Some investors use a higher percentage where prices are high and selling costs are a smaller share of the price, and a lower one for riskier projects. Run the full numbers in the fix and flip calculator before you commit to any offer.
Does the 70% rule work for rentals?
It was built for flips. For a rental you plan to keep, the BRRRR and cash flow calculators are better tools because the result depends on rent and the refinance, not the resale.
Related
Fix and flip calculator
Estimate fix-and-flip profit, cash needed and ROI from purchase price, rehab budget, holding costs, loan terms and ARV, with a worked example.
Wholesale assignment fee calculator
Estimate the maximum wholesale assignment fee: the end buyer's maximum price (ARV x rule % - repairs) minus your contract price, less your costs.
BRRRR calculator
Run a BRRRR deal (buy, rehab, rent, refinance, repeat): all-in cost, refinance loan, cash left in the deal, cash flow and cash-on-cash return.