Ask any experienced house flipper how they decide what to offer, and you’ll hear about the 70% rule. It’s a fast back-of-the-napkin formula that keeps you from overpaying — and it’s the first filter most investors run before they spend time on a deal.
What the 70% rule says
The rule caps what you pay so there’s enough spread to cover repairs, carrying costs, and profit:
Max Offer = (ARV × 70%) − Estimated Repairs
ARV is the after-repair value — what the home will sell for once it’s fixed up, based on comparable sales. The 30% you hold back is the buffer that absorbs your rehab, holding and selling costs, financing, and the profit that makes the project worth doing.
A worked example
Suppose comparable renovated homes in the neighborhood sell for $300,000 (your ARV) and the property needs $45,000 in repairs. The 70% rule gives:
- $300,000 × 70% = $210,000
- $210,000 − $45,000 repairs = $165,000 max offer
So you’d aim to buy at $165,000 or below. The $90,000 gap between your max offer plus repairs ($210,000) and the ARV ($300,000) is what covers everything else and leaves a profit.
Try it yourself
Run the 70% rule, model hard-money and holding costs, and see your projected flip profit and ROI.
Open the Fix & Flip Calculator →Why 70%? Where the buffer goes
That 30% holdback isn’t profit — most of it gets eaten by costs people forget on their first flip:
- Selling costs — agent commissions and closing costs often run 6–8% of the sale price.
- Holding costs — loan interest, property taxes, insurance, and utilities for every month you own it.
- Financing costs — hard-money points and interest, which are steep on short timelines.
- Buy-side closing costs and a contingency for the repairs that always cost more than the estimate.
Whatever’s left after all of that is your profit. On the example above, the $90,000 buffer might net $25,000–$40,000 once the dust settles — which is why the rule is a starting point, not a guarantee.
Where the 70% rule breaks down
- Hot or expensive markets. In high-demand areas you may have to use 75% just to win deals — accepting thinner margins for faster, more certain resales.
- High-priced homes. On a $900,000 ARV, a flat 30% buffer is far more dollars than you need; experienced flippers use a fixed profit target instead.
- Bad ARV or repair estimates. The rule is only as good as its two inputs. A 10% miss on ARV or a lowballed rehab can erase the whole margin.
The bottom line
The 70% rule is a fast screen to reject obvious losers and anchor your first offer — not a substitute for a full deal analysis. Once a property passes, model the actual financing, holding period, and selling costs to see your real profit and ROI.
Run your ARV and repair numbers through the Fix & Flip Calculator to get the max offer plus a full profit and ROI breakdown. Planning to keep the property instead of selling? Compare the math with the BRRRR Calculator.