Maximum allowable offer
70 Percent Rule House Flipping Calculator
The 70% rule sets your maximum offer at 70% of after-repair value minus the rehab budget. On a $385,000 ARV needing $68,200 of work that is $201,300. The calculator below computes it instantly at any multiplier, and the sections underneath show what the 30% you held back is really paying for.
Maximum allowable offer
Maximum allowable offer
$207,500
70% of a $385,000 after-repair value, less $62,000 of rehab.
All-in at that offer
$269,500
Offer plus rehab.
Gross spread to ARV
$115,500
30.0% of ARV, before closing, carry and commission.
Offer per $1,000 of ARV
$539
Useful for offering fast on a driving-for-dollars list.
Break-even offer
$323,000
Pay this and every cost of the project comes out of your profit.
The rule
MAO = ARV × multiplier − rehab − assignment fee
= $385,000 × 70% − $62,000
= $207,500
The spread of $115,500 — 30.0% of ARV — has to cover closing costs on both ends, holding costs, lender points, commission and your profit. The rule is a filter, not a profit forecast.
Where the 30 percent goes
The rule looks generous until the costs are itemised. Take the loaded example — a $385,000 ARV, $68,200 of rehab including contingency, six months held, 85% loan to cost at 11.5% with two points, 7% to sell.
| Cost | Amount | % of ARV |
|---|---|---|
| Purchase closing costs at 2% | $4,200 | 1.1% |
| Lender points at 2% | $4,729 | 1.2% |
| Hard money interest, 6 months at 11.5% | $13,597 | 3.5% |
| Holding costs, 6 months | $4,320 | 1.1% |
| Selling costs at 7% | $26,950 | 7.0% |
| Total transaction and carry | $53,796 | 14.0% |
| Left for profit out of the 30% | $61,704 | 16.0% |
With that cost stack, buying anywhere near the 70% number leaves about 16% of ARV as profit — the bottom of the range experienced flippers target. Anything that goes wrong comes straight out of it: an extra month of carry costs $2,986 in interest and holding, and a 5% miss on ARV costs $19,250 before the lower selling costs are credited back.
When 70 percent is the wrong multiplier
Transaction costs do not scale with price. A $120,000 flip and a $500,000 flip both pay for title work, a survey, an inspection, permits and a lender’s legal fee — but on the smaller deal those fixed costs are four times the share of value. That is why the multiplier moves:
- Under $150,000 ARV. 60% to 65% is common; fixed costs and thin spreads leave no room.
- $150,000 to $400,000. 70% is the standard, and it is where the rule was calibrated.
- Over $500,000. 75% to 80% is often workable, but the carry risk is larger in absolute dollars and the buyer pool is smaller.
- Wholesaled deals. Deduct the assignment fee explicitly. The calculator has a field for it, because folding it into rehab hides it.
The rule protects against the rehab estimate, not the ARV
Common questions about the 70 percent rule
- What is the 70 percent rule in house flipping?
- Your maximum offer is 70% of the after-repair value minus the rehab budget. On a $385,000 ARV with $68,200 of budgeted work, that is $269,500 − $68,200 = $201,300. The 30% held back is meant to cover buying costs, holding costs, financing, selling costs and profit.
- What does the 30 percent actually pay for?
- On a $385,000 ARV, 30% is $115,500. The project loaded on this page spends $4,200 on purchase closing, $4,729 on lender points, $13,597 on hard-money interest over six months, $4,320 on holding costs and $26,950 on selling costs — $53,796 in total — leaving about $61,700 of profit. The margin is thinner than 30% sounds.
- Should I use 70 percent or a different number?
- The multiplier flexes with price point and competition. Higher-value properties support 75% or even 80% because the fixed costs are a smaller share of a bigger number; cheap properties often need 60% to 65% because $15,000 of transaction cost is a much larger bite. The calculator above lets you set it.
- Does the 70 percent rule include closing costs?
- Implicitly, inside the 30% held back — which is exactly why the rule is unreliable on unusual deals. If you are paying an assignment fee to a wholesaler, financing at 12% for nine months, or selling in a market with 8% total transaction costs, the 30% buffer is being consumed by costs rather than profit.
- Is the 70 percent rule the same for a BRRRR?
- No, and confusing them is expensive. A flip has to cover selling costs, so it is priced off 70% of ARV. A BRRRR never sells, so it is priced off the refinance LTV — usually 75% of ARV, less refinance closing costs. The BRRRR number is higher because there is no commission on the way out.
To model the whole project rather than just the offer, use the fix and flip calculator. If you are keeping the property instead of selling it, the equivalent constraint is the refinance LTV on the BRRRR calculator. The rental-side shortcuts are the 1% rule and the 50% rule.
The rest of the deal, on the same numbers
Your inputs are shared across every calculator on this site, so changing a figure here changes it everywhere.
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