The 70% Rule for House Flipping: How It Works and When It Breaks

The 70% rule is the fastest way to screen a flip. It is also a shortcut that can be too strict in expensive markets and too loose in cheap ones.

DealWorthIQ Team · 2026-09-07

The 70% rule is a quick screen flippers and wholesalers use to decide whether a property is worth a closer look. It says your maximum offer should be 70% of the after repair value (ARV), minus the cost of repairs.

Maximum offer = ARV × 70% − repair costs

A worked example

A house will be worth $300,000 once renovated and needs $45,000 of work. 70% of $300,000 is $210,000. Subtract the $45,000 rehab and your maximum offer is $165,000.

The remaining 30% of ARV, $90,000 here, has to cover buying and selling closing costs, agent commissions, loan interest and points, taxes, insurance, and utilities while you hold the property, plus your profit.

Where the rule breaks down

Low-priced houses: on a $120,000 ARV, 30% is only $36,000. Closing costs, commissions, and a few months of holding costs can eat most of it before you earn anything.
High-priced houses: on a $900,000 ARV, 30% is $270,000. That margin is so large that investors in expensive markets often pay 75% to 80% of ARV and still profit, and a strict 70% offer will rarely win.
Long or expensive projects: a nine-month rehab financed with hard money costs far more to carry than a three-month cosmetic flip.
A shaky ARV: the rule is only as good as the ARV you feed it. Overestimate ARV by 10% and the whole cushion shrinks.

Use it to screen, not to decide

The 70% rule is good for sorting fifty leads into five worth analyzing. Before you make an offer, replace the 30% cushion with the real costs of the deal: your closing costs, your loan terms, your expected hold time, and the profit you need. That tells you the most you can pay and still hit your target, and how much room you have if the rehab or the sale goes long.

Fix & flip calculator: Replace the 70% shortcut with a full cost stack: purchase, rehab, financing, holding, and selling costs.