Flip analysis
70% Rule Calculator
The 70% rule is the flipper's screening formula: pay no more than 70% of a property's after-repair value, minus repair costs. Enter your ARV and rehab budget — and adjust the percentage to match your market, because 70 is a starting point, not a law.
The rule holds back $90,000 (30% of ARV) — that's not all profit. It has to cover closing costs on both ends, holding and financing costs, and selling fees before what's left is yours.
Informational only, not professional advice. This is a screening rule of thumb — a real offer should come from a full deal analysis of this property's actual costs, financing, and timeline.
Methodology
The 70% rule says an investor should pay at most 70% of a property's after-repair value minus the cost of repairs (Rocket Mortgage: What is the 70% rule in house flipping?). The calculation:
- ARV × rule percentage — the most the purchase-plus-rehab total should reach
- Maximum offer = that amount − repair costs
- Cushion = ARV × (100% − rule percentage) — what's reserved for transaction costs, holding costs, and profit
The rule works because it forces every cost of a flip to fit inside a fixed fraction of the exit price before you've seen a single invoice. It fails the same way — as a fixed fraction, it knows nothing about your actual costs.
Assumptions and limitations
- The output is only as good as the ARV. An ARV that's 10% optimistic moves the maximum offer by 7% of the property's value — estimate it from real comps, not the listing agent's number.
- 70% is a national shorthand. High-priced markets commonly work at 75–85%; low-priced markets may need less than 70% because fixed costs loom larger. The percentage is an input here for exactly that reason.
- The rule ignores your actual holding period, financing rate, and selling costs — a slow flip at a high interest rate can lose money inside the rule.
- It's a screen for whether a deal deserves full analysis, not a substitute for one.
Last reviewed: July 2026
Frequently asked questions
Why 70%? What is the other 30% for?
The 30% the rule holds back is not profit — it's the total cushion the deal has to live on. Out of it come closing costs when you buy, holding costs while you renovate (financing interest, taxes, insurance, utilities), selling costs when you exit (agent commissions, closing costs again), and only then your profit. On a typical flip those costs consume a large share of the 30%, which is why flips that "only" slightly overpay routinely end up break-even or worse.
Should I always use exactly 70%?
No — it's a rule of thumb, not a law, and it varies by market and price point. In expensive, fast-moving markets, experienced flippers often work at 75–85% because absolute dollar margins are still large and competition forces it. In cheap or slow markets, 65% or lower may be needed because fixed costs eat a bigger share of a small ARV. That's why the rule percentage is an editable input here rather than a constant.
What should I include in repair costs?
The full renovation budget to bring the property to the condition of your ARV comps: materials, labor, permits, and a contingency (10–20% is a common planning range) for what you'll find once walls are open. Underestimating rehab is the most common way flips fail — every dollar the budget misses comes directly out of the cushion. Holding and selling costs don't belong here; the rule's 30% holdback is meant to cover those.
Is the maximum offer the same as MAO?
Yes — MAO stands for maximum allowable offer, and the 70% rule is the standard shorthand for computing it: ARV × 70% − repair costs. The figure is also connected to lending practice: many hard-money lenders cap loans at around 70% of ARV, so a purchase inside the rule tends to be a purchase the financing can actually cover. Your real ceiling should come from a full deal analysis; the MAO is the screen that tells you whether a deal is worth analyzing at all.
Related tools
After-repair value from comparable sales — each comp's price per square foot, averaged and applied to your square footage, with every step shown.
Open tool →Rehab Cost EstimatorBuild a flip's repair budget the honest way — a line-item takeoff of the scope of work by category plus a contingency, producing the repair-costs figure the 70% rule and flip profit tools ask for.
Open tool →Flip Profit CalculatorThe full accounting of a flip — purchase, rehab, holding, and selling costs against the expected sale price, with projected profit and return on cost.
Open tool →Mortgage Payment CalculatorMonthly principal & interest from price, rate, and term — plus taxes, insurance, and HOA — with the amortization formula shown.
Open tool →