70% Rule Calculator
The bedrock rule for house flippers: never pay more than 70% of after-repair value minus rehab costs. Find your maximum allowable offer instantly.
What the 70% Rule means
The 70% Rule is the most quoted heuristic in house flipping. It says: never pay more than 70% of after-repair value, minus the cost of rehab. The 30% you're leaving on the table covers your closing costs, holding costs, selling costs, financing, surprises, and your actual profit.
It looks aggressive on paper — but every line of that 30% buffer is real money that walks out the door before you collect your profit.
Where the 30% actually goes
- ~9% — Selling costs: 5–6% agent commission + 2–3% closing concessions and title
- ~5% — Holding costs over 4–6 months: taxes, insurance, utilities, HOA
- ~4% — Hard money interest and origination if financed
- ~2% — Acquisition closing costs
- ~10% — Your profit margin
That math assumes everything goes right. Rehab usually doesn't, and the market can shift on you. A 70% rule offer is the ceiling, not the target.
A house will be worth $300,000 after a $45,000 rehab. What should you offer?
If you buy at $165,000 and spend $45,000 on rehab, you're in for $210,000 total before any holding or selling costs.
That's before holding costs, financing costs, or any rehab overruns. A real flipper would see closer to $35,000–$45,000 net on this deal.
When to deviate from 70%
Go lower (65%) in markets that are softening, with long days-on-market, lots of inventory, or seasonally slow periods. You need more cushion.
Hold at 70% in stable, normal markets. This is the default for a reason.
Go higher (75%) only in extremely hot markets where you're confident inventory will sell quickly above ARV. Some experienced flippers in 2021-22 used 75–80% — many got burned when the market shifted.
The rule is conservative for a reason: most new flippers overestimate ARV by 5–10% and underestimate rehab by 15–25%. The buffer absorbs those mistakes. Until you've completed 5+ flips, stick to 70% or lower.
Frequently asked questions
What if my hard money lender uses a different rule?
Most hard money lenders will lend up to 70-75% of ARV but require you to bring some skin in the game. Their rule is about their downside; the 70% rule is about yours. They aren't the same — and using their max as your max means you have no margin of safety.
Does the 70% rule work in expensive markets?
It gets harder in high-cost-of-living markets where every dollar of ARV is more leveraged. Some California, Boston, and NYC flippers use 75–80% out of necessity. You can still make money — but the margin for error is much thinner, and the carrying costs are brutal if you miss.
What's a realistic rehab budget?
Get a contractor walk-through before you commit. Most flippers use $20–35/sqft for cosmetic-only rehabs, $35–60/sqft for kitchens-baths-flooring, and $75/sqft+ for full guts. Add 15–20% contingency on top of whatever number you land on.
How do I estimate ARV?
Three to five sold comps within the last 90 days, same neighborhood, same bed/bath/size (within 10%), and same condition (post-rehab). Don't use active listings or "Zestimate" — both inflate. When in doubt, get a broker price opinion or a pre-purchase appraisal.
The 70% rule is a screening heuristic, not a guarantee. Always verify ARV with local comps, get a contractor estimate before committing, and budget for the unexpected. Markets shift — what worked last year may not work this year.