How accurate is the 70% rule?

The 70% rule is only a starting point. It ignores local market conditions, financing terms, and your specific cost structure. In hot markets, investors may accept 75–80% of ARV, while in riskier or slower markets they may require 60–65%. Always build a detailed budget and use the rule as a sanity check, not as a guarantee of profit.

How do I adjust the 70% rule for my market?

You can adjust the 70% rule by changing the base percentage and cost assumptions. For example, if your holding and closing costs are lower, you might safely offer 75–80% of ARV minus repairs. Our calculator lets you customize holding, buying, and selling cost percentages and your target profit so the "rule" matches your real numbers.

What is the difference between the 70% rule and the Rule of 70 in investing?

The 70% rule in house flipping is about how much to pay for a property relative to its After-Repair Value. The Rule of 70 in investing is a time-value shortcut: you divide 70 by an annual growth rate to estimate how many years it takes for an investment to double. They are unrelated concepts that happen to use the same number.

Should I ever break the 70% rule?

Experienced investors sometimes exceed 70% of ARV when they have very accurate cost estimates, low financing costs, or strong confidence in rapid resale. However, beginners are usually safer staying at or below 70% until they have a proven track record and a good handle on their true costs and timelines.

70% Rule House Flipping Calculator

Q: What is the 70% rule in house flipping?

The 70% rule is a quick rule of thumb used by house flippers to estimate the maximum price they should pay for a property. It says you should pay no more than 70% of the property's After-Repair Value (ARV) minus repair costs. In formula form: MAO = 0.70 × ARV − Rehab Costs.

Estimate your maximum allowable offer (MAO) on a flip using the 70% rule, with full cost breakdown and customizable assumptions.

Flip Deal Analyzer (70% Rule + Detailed Costs)

After-Repair Value (ARV)

Estimated resale price after all renovations.

Rehab / Renovation Costs

Contractor, materials, permits, contingency, etc.

Base 70% factor Adjust for your market

70%

Advanced cost assumptions

Holding & financing costs

% of ARV

Buying / closing costs

% of ARV

Selling costs (agent, title, etc.)

% of ARV

Target profit settings

Percent of ARV Fixed amount

Target profit

% of ARV

Maximum Allowable Offer (MAO) 70% rule

0% of ARV

Deal summary

ARV: $0
Rehab costs: $0
Holding & financing: $0
Buying / closing costs: $0
Selling costs: $0
Total costs (incl. MAO): $0
Projected profit: $0
Profit margin on ARV: 0%
Return on cash invested: 0%

Quick 70% rule estimate

Classic rule of thumb (ignores holding, closing, and selling costs):

What is the 70% rule in house flipping?

The 70% rule is a quick rule of thumb used by house flippers to estimate the maximum allowable offer (MAO) they should make on a property.

Classic 70% rule formula

MAO = 70% × ARV − Rehab Costs

Where:

ARV = After-Repair Value (expected resale price after renovations)
Rehab Costs = all renovation, labor, materials, and permit costs

The idea is simple: if you buy at or below this MAO, there should be enough room to cover holding costs, closing costs, selling costs, and profit. In reality, those costs vary a lot by market and financing, which is why this calculator lets you customize all the assumptions instead of relying on a one-size-fits-all 70%.

How this calculator improves on the basic 70% rule

Most online 70% rule tools only apply the simple formula. This calculator goes further by:

Letting you adjust the base percentage (50–85%) for your market.
Breaking out holding, buying, and selling costs as separate percentages of ARV.
Letting you choose a target profit as a percent of ARV or a fixed dollar amount.
Showing a full deal summary: MAO, total costs, profit, margin, and ROI.
Displaying the classic 70% rule MAO side-by-side for comparison.

Detailed formula used in this calculator

We start from your ARV and subtract all costs and your desired profit to get the recommended maximum allowable offer (MAO).

Step 1 – Cost components

Holding Costs = ARV × Holding%
Buying Costs = ARV × Buying%
Selling Costs = ARV × Selling%
Profit Target = (ARV × Profit%) or Fixed Profit

Step 2 – Maximum allowable offer

MAO = ARV − Rehab − Holding − Buying − Selling − Profit Target

The base factor slider (default 70%) is there as a sanity check. If your detailed cost assumptions imply that you are effectively paying 80–85% of ARV, the slider helps you see that at a glance and decide whether the deal is too tight.

Worked example: applying the 70% rule to a flip

Suppose you are analyzing a potential flip with these numbers:

ARV: $300,000
Rehab costs: $60,000
Holding & financing: 8% of ARV (taxes, insurance, interest, utilities)
Buying costs: 2% of ARV (title, lender fees, etc.)
Selling costs: 8% of ARV (agent commissions, closing costs)
Target profit: 10% of ARV = $30,000

First, compute the cost components:

Holding = 0.08 × 300,000 = 24,000
Buying = 0.02 × 300,000 = 6,000
Selling = 0.08 × 300,000 = 24,000
Profit = 0.10 × 300,000 = 30,000

Now plug everything into the MAO formula:

MAO = 300,000 − 60,000 − 24,000 − 6,000 − 24,000 − 30,000
MAO = 156,000

In this scenario, you would want to pay no more than $156,000 for the property. That equates to about 52% of ARV, which is more conservative than the classic 70% rule because your costs and profit target are relatively high.

When the 70% rule works well (and when it doesn’t)

Situations where the 70% rule is useful

As a quick screening tool when you’re looking at dozens of deals.
In markets where cost structures are fairly typical (e.g., 10–12% total closing + selling costs).
When you have short holding periods and relatively cheap financing.

Situations where you should be cautious

High-cost markets where closing and selling costs are much higher than average.
When using hard money loans with high points and interest rates.
In very hot markets where competition pushes offers above 70% of ARV.
On complex projects (additions, structural work) where rehab budgets are harder to estimate.

In these cases, rely more on the detailed cost breakdown in this calculator than on the simple 70% shortcut.

70% rule vs. Rule of 70 in investing

Many investors confuse the 70% rule in house flipping with the Rule of 70 used in macroeconomics and personal finance.

70% rule (house flipping): A pricing guideline: MAO = 70% × ARV − Rehab Costs.
Rule of 70 (investing): A time-value shortcut: Years to double ≈ 70 ÷ annual growth rate (%).

They are completely different concepts that happen to use the same number. This page focuses on the house flipping version.

Practical tips for using the 70% rule safely

Be conservative with ARV. Use recent, truly comparable sales and adjust for condition and location.
Overestimate rehab costs. Add a contingency (often 10–20%) for surprises.
Include all soft costs. Don’t forget utilities, insurance, taxes, lender fees, and staging.
Stress-test your deal. Use the calculator to see what happens if ARV drops 5–10% or rehab runs over.
Track your real numbers. After each flip, compare actual costs to your assumptions and refine them.

70% rule FAQs

Is the 70% rule still valid in today’s market?

It’s still a useful starting point, but not a universal law. In very competitive markets, many successful flippers buy at 75–80% of ARV minus repairs, while in slower or riskier markets they may insist on 60–65%. Always adapt the rule to your local conditions and your own risk tolerance using detailed numbers like those in this calculator.

What percentage should I use instead of 70%?

It depends on your financing, costs, and goals. If you have cheap money and low holding costs, you might be comfortable at 75–80%. If you use expensive hard money or expect long holds, you may want 60–65%. Use the slider and advanced settings to see what percentage leaves you with an acceptable profit and ROI after all costs.

Does the 70% rule include closing and holding costs?

The classic formula implicitly assumes that the 30% “buffer” (100% − 70%) covers all of your closing costs, holding costs, and profit. In reality, those costs can easily consume most of that buffer. This calculator breaks them out explicitly so you can see exactly how much room is left for profit.

Can I use the 70% rule for rental properties?

You can use it as a quick check on your purchase price, but rental deals are usually evaluated with cash flow metrics (cap rate, cash-on-cash return, DSCR) rather than a flip-style 70% rule. For buy-and-hold, focus more on long-term income and appreciation than on a one-time flip profit.