70% Rule Calculator (House Flipping)
The 70% rule helps house flippers determine maximum purchase price. It accounts for repair costs while leaving room for profit and unexpected expenses.
The formula: Maximum Offer = (After Repair Value × 70%) - Repair Costs. The 30% cushion covers holding costs, selling costs, and profit margin.
The 70% rule is conservative by design. Flipping involves significant risk: repairs often exceed estimates, markets shift, and sales take longer than planned. The 30% buffer protects against these variables.
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How to Use This Calculator
- 1 Enter After Repair Value (ARV)
- 2 Enter estimated repair costs
- 3 Calculate Maximum Allowable Offer
- 4 Formula: MAO = (ARV × 70%) - Repairs
- 5 Adjust for local market conditions
Formula
Example Calculation
Flip with $350K ARV, $50K repairs
- ARV: $350,000
- Repairs: $50,000
Pro Tips
- 70% is conservative—and that's good
- Never overpay hoping for appreciation
- Buffer protects against surprises
Important Considerations
- • Luxury homes may need different percentages
- • Fast markets may justify higher offers
- • Repair estimates are often wrong—cushion protects you
Frequently Asked Questions
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