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
What the seller wants (checked against the rule)
Maximum offer
$160,000
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.
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.
- ARV
- After-repair value, from comparable finished sales
- 0.70
- Covers selling costs, holding costs, financing and profit
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.
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.
Apply the rule. 70% of ARV, minus repairs. That is your ceiling, not your opening offer.
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
Because the 30% is not profit. It has to absorb selling costs of roughly 6-8%, months of holding costs, hard-money financing which is expensive, and only then the profit.
On the $300,000 example, 70% leaves about $51,000 of profit. At 80% it drops to around $21,000, for identical work and identical risk. That is why the number is where it is.
From recent sales of renovated homes of similar size, age and location, ideally within the last three to six months and within about half a mile.
Do not use listing prices, and do not use unrenovated sales. If you cannot find good comparables, that itself is a warning: an ARV you cannot support with evidence is a guess, and everything else rests on it.
It gets harder to apply. In high-priced competitive markets, deals at 70% are rare and experienced flippers sometimes work at 75% or higher.
That is a deliberate trade of margin for volume, not a free adjustment. Going above 70% means a smaller cushion, so it should come with a tighter repair budget and a faster timeline, not looser ones.
It usually is, and almost always in one direction. Structural problems, wiring, plumbing and roof issues tend to appear once work starts.
Add 10-20% contingency to any budget before applying the rule. A $45,000 estimate that becomes $60,000 takes $15,000 straight out of the profit.
No. They answer different questions for different strategies. The 70% rule prices a flip against its resale value.
The [1% rule](/real-estate/one-percent-rule-calculator) screens a rental by asking whether monthly rent reaches 1% of the price. A property can pass one and fail the other easily.
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