70% Rule House Flip Calculator

ARV: $300,000, Repair Costs: $40,000 Step 1: 70% of ARV = $300,000 × 0.70 = $210,000 Step 2: Max Offer = $210,000 − $40,000 = $170,000 30% margin = $90,000 for profit + costs

The 70% Rule is a widely adopted guideline used by real estate investors to calculate the maximum price they should offer for a fix-and-flip property. This fundamental rule helps ensure a healthy profit margin and accounts for various project expenses. It dictates that an investor should never pay more than 70% of the After Repair Value (ARV) of a property, minus the estimated repair costs. The ARV is the property's anticipated market value after all renovations are completed. The remaining 30% of the ARV is intended to cover the investor's profit, as well as crucial overheads such as closing costs, holding costs during the renovation period, and a contingency fund for unforeseen issues. By adhering to this rule, investors can mitigate risks and increase their chances of a successful and profitable house flip. It provides a structured approach to valuing distressed properties, making it an indispensable tool for both novice and seasoned flippers seeking to make smart investment decisions.