70% Rule Calculator
The classic flipper acquisition formula — applied mathematically before every negotiation.
Free to start. No spreadsheets.
Visual Walkthrough
The 70% rule turns ARV into an acquisition ceiling in one step — and the remaining 30% buffer is where all your costs and profit live:
Where the 30% Buffer Goes — $300k ARV Example
Buy
3%
$9k
Hold
6%
$18k
Sell
8%
$24k
Profit
13%
$39k target
Total 30% buffer = $90,000 at $300k ARV — split across 4 cost/profit buckets
Adjust the % for Your Market
Slow / Rural
65%
High DOM, extended hold
Standard
70%
Most US markets
Fast / Cash
72–75%
Low DOM, no financing cost
The 70% Rule Formula — And When to Modify It
The 70% rule is simple in formula but requires judgment in application. Understanding what the 30% buffer actually covers — and when to tighten it — is what separates profitable investors from hopeful ones.
What the 30% Actually Covers — Real Example
ARV = $300,000. Standard 70% MAO = $210,000. Rehab: $40,000. So purchase price ceiling: $170,000.
Where the 30% ($90,000) goes:
Buying costs (3%): $5,100
Hard money (5 mo @ 12%): $8,500
Insurance + taxes (5 mo): $3,000
Selling (realtor 6% + closing 2%): $24,000
Total costs: $40,600
ARV: $300,000
Purchase: $170,000
Rehab: $40,000
All costs: $40,600
Net Profit: $49,400 (16.5%)
Pro Tip: In 2024-2025, with hard money rates at 10-13%, the 30% buffer is tighter than it was in the 2018-2021 era. Run the Flip Calculator after your 70% rule check to model actual carrying costs and verify your margin still holds at today's rates.
Understanding the 70% Rule
What the 70% Rule Does
Sets a strict maximum purchase price — the 'ceiling' — based on the property's After Repair Value and estimated rehab cost. The formula ensures the remaining 30% of ARV covers all transaction costs (buying, holding, selling) plus your target profit margin. It's the fastest reliable filter in residential real estate investing.
Why Flippers Live and Die by This Rule
Without a hard acquisition limit, emotions take over. 'I love this property,' 'The market is hot,' 'I can make it work' — these thoughts have destroyed more investment portfolios than any market crash. The 70% rule converts emotional decisions into mathematical ones. Experienced investors treat it as non-negotiable.
Applying the 70% Rule
Establish Verified ARV
Pull 3 closed renovated comps within 0.5 miles. Calculate the average price-per-sqft and multiply by your property's size. Never use listing prices or automated estimates.
Estimate Full Rehab Cost
Build an itemized rehab estimate (not a per-sqft guess). Include mechanical, cosmetic, and structural work plus 10-12% contingency.
Calculate and Enforce Your MAO
MAO = (ARV × 0.70) - Rehab. This is your ceiling. Offer below it, negotiate up to it. Never exceed it — not even by $1,000.
Most investors lose money here — avoid these mistakes:
- Adjusting the percentage upward (to 75%, 80%) without specific data to justify it — 'the market is hot' is not a data-driven reason.
- Using ARV from Zillow or active listings instead of closed comparable sales — inflated ARV + 70% rule = overpriced acquisition.
- Not adjusting downward in slow markets or when using high-interest financing — the 70% was designed for average conditions, not extremes.
Example Scenario
Interactive MAO Calculator
Do not exceed this value or your target margin collapses.
Real-World Application
How experienced flippers apply the 70% rule:
- ✓Run the 70% rule on every lead before touring — it takes 30 seconds and eliminates 80% of unworkable deals instantly.
- ✓Use conservative ARV (lower bound of comps) when applying the 70% rule. Optimistic ARV + 70% rule = false confidence.
- ✓Treat the 70% result as your absolute ceiling, then offer 5% below it — let the seller negotiate up to your ceiling, not above it.
- ✓In high-interest-rate environments (7%+ on hard money), consider using 65-67% to compensate for elevated carrying costs.
- ✓Track every deal's actual outcome vs. your 70% projection. If costs consistently exceed 30%, adjust your percentage down.
70% Rule — What Every Flipper Needs to Understand
Q.Is the 70% rule the same as the MAO calculation?
The 70% rule is a simplified version of the MAO (Maximum Allowable Offer) calculation. The 70% rule uses a fixed percentage (70%) as the acquisition multiplier without modeling specific holding costs or profit targets. The MAO calculator lets you input your exact holding cost projections, custom profit target, and specific transaction fees — giving a more precise bidding ceiling. Use the 70% rule for quick lead screening, then use the MAO calculator before submitting a formal offer.
Q.Can I use the 70% rule for a wholesale deal?
For wholesale, use 65% instead of 70%. Wholesalers need to leave room for the end buyer (a flipper) to still hit their 70% rule after paying the assignment fee. Example: ARV $250,000, rehab $40,000. A flipper's MAO is ($250k × 0.70) - $40k = $135,000. If you wholesale the deal for a $10,000 fee, your contract price must be $125,000 or less — which means using roughly 65% of ARV in your own acquisition formula.
Q.Why do some investors use 65% and others use 75%?
Market conditions and business model drive the percentage. Wholesalers use 60-65% (need room for their fee AND the buyer's margin). Experienced cash flippers in competitive markets may use 72-75% because they have lower carrying costs (no hard money) and faster sell times. New investors should start at 70% until they have 10+ deals of transaction cost data. Raising your percentage without data is how investors lose money in market downturns.
Q.If ARV is $300,000 and rehab is $0 (cosmetic-only), what's my MAO?
If rehab is truly zero (tenant-ready, no work needed), MAO = $300,000 × 0.70 = $210,000. However, be skeptical of zero-rehab deals — even 'cosmetic-only' properties often have $5,000-$15,000 in minimum work (paint, flooring, deep clean, minor repairs). More importantly, if a property needs no work, it's likely priced closer to ARV — you'll rarely find a zero-rehab deal at 70% of market value unless there's a very motivated seller.
Q.How do I handle deals where I'm not sure about ARV yet?
Run a conservative ARV (lower end of comp range) and an optimistic ARV (upper end). Calculate the 70% rule for both scenarios. If the deal only works at the optimistic ARV, it's too dependent on ARV accuracy — pass. If it works at the conservative ARV, you have real margin protection. Never base your MAO on the upper end of an ARV range you're uncertain about.
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