70% Rule (House Flipping) Calculator

Find the most you should offer on a flip, and check the profit at that price.

Details

$

What it sells for once finished

$
Rule to apply
$

What the seller wants (checked against the rule)

Maximum offer

$160,000

70% of ARV$210,000
Less renovation− $50,000
Maximum offer$160,000
Asking price$158,000
Room below the max$2,000

Profit at asking

$57,640

Return on cost

23.8%

Total project cost

$242,360

Break-even resale

$237,348

This applies the 70% rule to give a maximum offer on a flip: 70% of the after-repair value, minus the cost of the repairs.

It returns the offer figure and shows what the remaining 30% has to cover.

The 70% rule in house flipping

The 70% rule says a flipper should pay no more than 70% of a property's after-repair value, minus the repair cost. It is the standard first screen for deciding whether a distressed property is worth a closer look.

The rule looks arbitrary until you see what the missing 30% is for. It is not profit. It has to cover selling costs, holding costs, financing and profit all at once, and those add up faster than most first-time flippers expect.

After-repair value, or ARV, is what the property will sell for once the work is done. Getting it wrong is the single biggest cause of a flip losing money, because every other number in the calculation depends on it.

What the 30% actually pays for
$300,000after-repair value
× 70%the rule
= $210,000
− $45,000repair budget
= $165,000maximum offer

The $90,000 held back covers about $24,000 of selling costs, $15,000 of holding and financing, and roughly $51,000 of profit. Cut the rule to 80% and the profit is what disappears.

What to enter

After-repair value (ARV)
What the finished property will sell for, based on recent sales of comparable finished homes nearby. Not what you hope for.
Repair costs
The full renovation budget including permits and contingency. Experienced flippers add 10-20% for what the walls hide.
Rule percentage
70% is the convention. Competitive markets sometimes push to 75%, and unfamiliar or high-risk projects should go lower.

What this assumes

The rule bundles selling costs, holding costs, financing and profit into one number. It does not itemise them, which is why any deal that passes still needs a full budget.

It assumes a normal sale timeline. A flip that sits unsold for months eats the margin through holding costs.

How to calculate your maximum offer using the 70% rule

Two operations: take 70% of the ARV, then subtract the repair budget.

maximum offer = (ARV × 0.70) − repair costs
ARV
After-repair value, from comparable finished sales
0.70
Covers selling costs, holding costs, financing and profit
  1. Establish the ARV from comparables. Look at recent sales of renovated homes of similar size and condition in the same neighbourhood. This is the number to be most careful about.

  2. Budget the repairs honestly. Get contractor quotes where you can, and add a contingency. Renovation budgets overrun far more often than they come in under.

  3. Apply the rule. 70% of ARV, minus repairs. That is your ceiling, not your opening offer.

  4. Check the full numbers before committing. The rule is a screen. Once a property passes it, build a real budget with actual selling costs, financing and a realistic timeline.

See a worked example: a flip that passes, and what the margin is made of
ARV
$300,000
Repairs
$45,000

70% of ARV: $300,000 × 0.70 = $210,000.

Less repairs: $210,000 − $45,000 = $165,000 maximum offer.

Checking it: sell at $300,000, less 8% selling costs ($24,000), less the $165,000 purchase, less $45,000 of repairs, less about $15,000 of holding and financing.

That leaves roughly $51,000 of profit. Pay $185,000 instead and the profit falls to about $31,000 for exactly the same work and risk.

$165,000 maximum offer

Frequently asked questions

Problems people actually run into

An optimistic ARV

Everything in the rule scales off ARV, so a 10% overestimate on a $300,000 valuation removes $30,000 from a margin that was around $51,000.

Flippers talk themselves into a higher ARV because it makes an appealing property work. Set the ARV from comparables before you fall for the house, not after.

Forgetting holding costs

Mortgage or hard-money interest, property tax, insurance and utilities run for every month you own it, and hard-money rates make that expensive.

A flip planned for four months that takes eight can lose most of its profit without a single thing going wrong on the renovation itself.

Results are estimates for general information only and are not professional financial, medical, or legal advice. Read our full disclaimer.

Last updated: September 4, 2026