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70% Rule Calculator

Find your maximum offer with the 70% rule.

Result

$170,000.00

How it is calculated

The tool computes Max offer = ARV × 0.70 − Repairs. ARV is the after-repair value, what you expect the property to sell for once renovated, and Repairs is your estimate of the renovation cost. Both are amounts in the same currency; the result is displayed in dollars.

ARV must be above zero and repairs cannot be negative. If repairs are large relative to ARV the result can go negative, which means the rule says there is no price at which the deal works. The 70% figure is a rule of thumb, not a law: investors in hot or cold markets, or with different financing and holding costs, use other percentages. The tool does not model taxes, loan interest or fees.

Worked example

A house is expected to sell for 300,000 after renovation, and repairs are estimated at 40,000. First 300,000 × 0.70 = 210,000. Then subtract repairs: 210,000 − 40,000 = 170,000. The tool shows a maximum offer of $170,000.00. Paying more than that leaves less than the 30% cushion the rule keeps for costs and profit.

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Common mistakes

  • Entering the current market value of the run-down house as ARV. ARV is the value after repairs, usually taken from comparable renovated sales.
  • Underestimating repairs. Because repairs are subtracted dollar for dollar, a 10,000 error lowers the true maximum offer by exactly 10,000.
  • Subtracting repairs before applying 70%. The order here is ARV × 0.70 first, then repairs, which gives a different result.
  • Treating the result as the price to open with or as guaranteed profit. It is a ceiling for a first-pass screen.
  • Ignoring a negative output. A negative offer means the repair bill is too high for the deal to meet the rule.

About this calculator

This calculator applies the 70% rule used in real estate house-flipping: Maximum Offer = (After-Repair Value × 0.70) − Estimated Repair Costs, a rule of thumb investors use to cap what they'll pay for a distressed property so there's enough margin left after renovation costs, closing costs, holding costs, and profit. Repair costs are subtracted separately; the 30% buffer below ARV (after-repair value) covers the closing costs, holding costs and the investor's target profit.

House flippers and real estate wholesalers evaluating a distressed property before making an offer, real estate agents advising investor clients, and newer investors learning to screen deals quickly use this as a first-pass filter before running a full renovation budget.

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Comments (1)

  • Editorial team

    The rule's 30 percent margin is meant to cover everything that is not repairs: financing, holding and selling costs, and your profit. The tool uses a fixed 70 percent and returns a negative number when repairs are too high, as with a 100,000 value and 80,000 of work, which gives -10,000. Treat a result near or below zero as a pass on that deal. Which percentage do flippers use where you buy?

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