The 70% rule says an investor should pay no more than 70% of a property's after-repair value (ARV) minus the estimated repair costs. For example, on a home with a $300,000 ARV and $40,000 in repairs, the maximum allowable offer is $300,000 × 0.70 − $40,000 = $170,000. The 30% buffer is meant to cover financing, holding, and selling costs while leaving room for profit.

ARV is the estimated market value of a property after all planned renovations are complete. Investors usually estimate it from recent sales of comparable, updated homes in the same area. ARV drives the maximum allowable offer and the projected resale price, so an accurate ARV is the single most important input in a flip.

Cash-on-cash ROI is the net profit divided by the actual cash you invested — down payment, un-financed rehab, closing costs, loan points, interest carry, and holding costs. Because flips are short, annualized ROI scales that return to a 12-month basis so you can compare deals of different hold lengths.

A realistic flip budget includes buy-side closing costs, hard-money points and interest, holding costs (property taxes, insurance, utilities, and loan payments during the hold), and sell-side costs like agent commissions and closing fees — typically 6–8% of the sale price. This calculator models all of them so the profit number is the real, after-everything figure.

Hard-money lenders fund short-term flips based on the deal rather than your income. They typically lend a percentage of the purchase price (you bring the rest as a down payment), often fund the rehab in draws, and charge origination points plus a higher interest rate paid monthly. Because the loan is interest-only and short, the main costs are points and the monthly interest carry over the hold.