After Repair Value (ARV) 70% Rule Calculator
The 70% rule is the industry standard for fix-and-flip max offer: take 70% of ARV (after repair value), subtract rehab cost, that's your max purchase price. Built-in 30% buffer covers closing, holding, selling costs, and profit.
| ARV | — |
| Rule percentage | — |
| ARV × rule % | — |
| Minus rehab | — |
| Maximum Allowable Offer (MAO) | — |
| Implied profit margin (built-in buffer) | — |
The 70% rule is the industry-standard max-offer formula for fix-and-flip: MAO = (ARV × 70%) − Rehab. The 30% buffer covers closing costs (2-3%), holding costs (3-5%), selling costs (8%), and profit (10-15%). Variants: 75% rule for slow markets, 65% for competitive markets or wholesaling deals.
What the 30% Buffer Pays For
(1) Acquisition closing ~2-3% (title, recording, lender fees). (2) Holding costs during 4-6 month rehab — interest on hard money (10-13% rate), property tax, insurance, utilities, often 3-5% of ARV total. (3) Selling costs ~8% (6% agent commission, 1-2% closing, staging, light cleanup). (4) Net profit target 10-15%. Add them up: 23-31% — that's why the rule exists.
Why Flippers Lose Money
The 70% rule fails when: (a) Rehab estimate was light — add 15-25% contingency to your contractor's scope. (b) Hold time exceeded plan — every extra month of hard money costs 1% of loan. (c) ARV comp pull was optimistic — use 3+ closed sales within 90 days, 0.5 mile, same beds/baths/sqft ±15%. (d) Market softened during rehab. Conservative ARV (low side of comps) and contingency padding are your safety net.
Last updated May 2026. Sources: BiggerPockets 70% Rule.