RealInvestorX
Rental deal math
The 70% rule: maximum offer for a flip
The 70% rule is a flipping shortcut: pay no more than 70% of the after-repair value (ARV), minus the cost of repairs. The leftover margin is meant to cover holding costs, selling costs and profit.
The formula
Maximum offer = ARV x 70% - repair costsWorked example
- After-repair value $250,000 x 70% = $175,000.
- Repairs $40,000. Maximum offer = $175,000 - $40,000 = $135,000.
Illustrative inputs for learning, not market data or a forecast. Replace every number with figures from your own deal.
How to use it
The ARV is only as good as your comparable sales, and repair budgets tend to overrun. In an expensive market 70% can be too strict, and in a slow one too generous. Treat it as a ceiling to check against a full budget.
Frequently asked questions
What is ARV?
After-repair value: what comparable renovated homes nearby have sold for.
Does the 70% rule work for BRRRR?
It is a flipping rule. BRRRR investors usually plan around the refinance appraisal and the loan they can take out.
Where does the other 30% go?
Holding costs, financing, closing and selling costs, and your profit.