70% Rule Calculator
The 70% rule is the time-tested rule of thumb that keeps house flippers and BRRRR investors from overpaying. It states that you should pay no more than 70 percent of a property's After Repair Value minus the cost of repairs. That built-in 30 percent haircut is not pure profit — it is the buffer that absorbs your holding costs, financing, closing fees, agent commissions, and the inevitable surprises that surface once demolition begins, while still leaving a margin worth the risk. This calculator instantly returns your Maximum Allowable Offer so you can walk into a negotiation with a disciplined ceiling. You can flex the rule percentage to reflect a hotter market where 75 percent is competitive, or a thinner margin you are willing to accept. Treat the output as your hard walk-away number and let deals that break it pass.
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Results update live as you type. Estimates only — not financial, tax, or investment advice.
The Formula
Maximum Allowable Offer = (After Repair Value × 70%) − Estimated Repair Costs
Understanding the 70% Rule Calculator
The 70% rule compresses an entire flip analysis into one fast guardrail: never pay more than 70% of the After Repair Value minus your repair costs. That 30% discount is not your profit — it is the pool that must absorb your holding costs, financing, closing fees, agent commissions on the resale, and the inevitable budget surprises, while still leaving a margin worth the risk you are taking. It exists to stop you from talking yourself into an overpriced deal.
The rule is a starting point, not gospel. In hot, low-inventory markets, competitive flippers often stretch to 75% because winning bids demands it, accepting a thinner buffer. On higher-priced homes, a flat 30% haircut can be more cushion than the project actually needs, so some investors use a dollar-based minimum profit instead. Treat the output as your disciplined walk-away number, then always confirm the deal with a full fix-and-flip profit projection before committing.
Frequently Asked Questions
Why is it called the 70% rule?
The name comes from the 70% multiplier: your maximum offer equals 70% of the property's After Repair Value, minus estimated repairs. The 30% that gets subtracted is a built-in buffer covering holding costs, financing, transaction fees, and profit — the expenses that a simple 'price minus rehab' calculation dangerously ignores.
When should I break the 70% rule?
Investors commonly stretch to 75% in very competitive markets where 70% offers never win, accepting a thinner margin. Conversely, on high-value homes the 30% discount may exceed what the deal needs. The rule is a screening heuristic — always validate with a detailed profit and holding-cost analysis before you deviate.
Does the 70% rule include closing and holding costs?
Yes, indirectly. The rule does not itemize them, but the 30% gap between 70% of ARV and the full ARV is specifically meant to cover closing costs, holding costs, selling commissions, and profit all at once. That is why you subtract repairs separately but leave the rest inside the buffer.