Free Tool

70% Rule Calculator

The 70% rule is a quick filter for fix-and-flip deals. Your maximum offer should be no more than 70% of the after-repair value (ARV) minus your estimated rehab cost. This leaves enough margin to cover carrying costs, closing costs, and profit.

Deal Parameters

After-Repair Value / ARV ($)

Estimated Rehab Cost ($)

Your Offer Price ($)

Custom Rule (%)

Max Allowable Offer (70%)

$100,000

ARV × 0.70 − Rehab

Your Offer vs. MAO

$100,000

Below MAO — Strong Deal

Custom MAO

$100,000

ARV × 70% − Rehab

Profit at MAO (70%)

$60,000

30.0% of ARV

Profit at Your Offer

$60,000

30.0% of ARV

How the 70% Rule Works

The Formula

MAO = (ARV × 0.70) − Rehab Cost

If a property has an ARV of $200,000 and needs $40,000 in rehab, your maximum offer is $100,000. Anything above that and your profit margin compresses to the point where the deal may not work.

What the 30% Covers

→Acquisition and closing costs (typically 1–3%)

→Holding costs — taxes, insurance, utilities during rehab

→Financing costs — hard money interest (8–12% annualized)

→Selling costs — agent commission (5–6%), closing costs

→Profit margin — target 10–15% of ARV