Seventy Percent Rule
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The 70% rule caps a flipper's maximum purchase offer at 70% of the after-repair value (ARV) minus the estimated cost of repairs. The remaining 30% of ARV is meant to cover holding costs, selling costs, financing, and a reasonable profit margin.

The 70% figure is an industry convention built from experience, not a mathematical law — it approximates the typical combined cost of holding, selling, and financing a flip (often 8% to 12%) plus a meaningful profit buffer. Some investors adjust this percentage up or down based on their local market and risk tolerance.

Very accurate — since ARV is the base the entire formula multiplies against, even a 10% overestimate of ARV can turn what looks like a profitable offer into a loss once real numbers come in. ARV should be based on genuinely comparable recent sales, not hopeful pricing.

Yes — renovation costs are subtracted separately after applying the 70% factor to ARV, so the formula already accounts for repairs. The resulting number is your maximum purchase price, meaning what's left for closing costs, holding costs, and profit comes from the gap between 70% of ARV and the repair-adjusted price.

It works best as a starting screen for typical cosmetic-to-moderate flips; very light rehabs or high-value luxury flips sometimes use a less conservative percentage (75-80%), while heavy structural rehabs or higher-risk markets often warrant a more conservative one (60-65%). Treat 70% as a common default, not a fixed rule.