Free house flipping calculator
70% Rule Calculator
The 70% rule formula is simple: MAO = ARV × 0.70 − repair costs. In plain terms, the maximum allowable offer is 70% of the after repair value minus what the renovation will cost. Try it below with your own ARV and repair numbers to get an instant maximum offer.
Maximum allowable offer
$170,000
$300,000 × 70% − $40,000
The 70% rule builds in your profit margin, closing costs, holding costs, and selling costs as one blended discount off ARV.
How the 70% rule works
The 70% rule answers one question fast: what's the most you should pay for this property? Take the after repair value (ARV), the price the home should fetch once renovated, multiply it by 70%, and subtract your estimated repair costs. What's left is your maximum allowable offer, or MAO. Say a property will be worth $300,000 renovated, and the rehab will cost $40,000. Seventy percent of $300,000 is $210,000; subtract the $40,000 in repairs and you're left with a $170,000 MAO. That figure is the ceiling on your purchase price, not a suggested offer. Most investors negotiate below it.
That 30% haircut isn't arbitrary. It bundles your profit margin with buying costs (closing fees, inspections, financing points), holding costs (loan interest, property taxes, insurance, and utilities while you own the property), and selling costs (agent commissions and closing costs on the sale) into one blended discount off ARV. Folding it all into one percentage is what makes the rule fast. It's also why the result is only a first-pass filter, not a final number.
A worked example
Let's run the calculator's own default numbers. The after repair value is $300,000. At the standard 70% rule, 70% of $300,000 is $210,000. Subtract the $40,000 rehab budget and your maximum allowable offer is $210,000 − $40,000 = $170,000. If you can get the property under contract at or below that number, and your repair estimate holds up once you're inside the walls, the deal clears the 70% rule's screening test.
Now switch the rule percentage to 65%, the more conservative setting some investors use in slower markets or on properties with more rehab uncertainty. Sixty-five percent of that same $300,000 ARV is $195,000. Subtract the same $40,000 in repairs and your MAO drops to $155,000, a full $15,000 lower than the 70% figure. That $15,000 gap is your added safety margin: room for the rehab to run over budget, the market to soften before you sell, or your holding period to stretch longer than planned. Try toggling the rule percentage in the calculator above to see exactly how sensitive your offer is to that one assumption.
Where the 70% rule breaks down
The 70% rule is a screening heuristic, not underwriting, and it breaks down in predictable places. On low-priced homes, the math gets tight fast: 30% of a $90,000 ARV is only $27,000, and real buying, holding, and selling costs, plus any profit at all, eat through that before repairs even start. The rule simply wasn't built for the bottom of the market.
Luxury and high-ARV flips often don't need a full 30% discount, since fixed transaction costs like permits, inspections, and title fees shrink as a share of a bigger resale price. There, the flat percentage can price you out of deals that would actually work. Wholesale assignments complicate things further, since the wholesaler's fee comes out of the same margin. And through all of this, the weakest input is usually the repair estimate itself: a rough guess in, a rough MAO out. Once a lead clears the 70% screen, tighten your numbers with a rehab cost estimator, confirm your value with an ARV calculator, and run the full picture through a house flip profit calculator before you commit to an offer.
Frequently asked questions
What is the 70% rule in house flipping?
The 70% rule says the most you should pay for a flip is 70% of the property's after repair value minus repair costs. If a home is worth $300,000 fixed up and needs $40,000 of work, your maximum allowable offer is $300,000 × 0.70 − $40,000 = $170,000.
How do you calculate MAO (maximum allowable offer)?
MAO = ARV × 0.70 − estimated repair costs. The 30% discount covers your profit margin plus buying, holding, and selling costs. Some investors use 65% in slow markets or 75% in competitive ones.
Is the 70% rule accurate?
It is a screening shortcut, not underwriting. It assumes roughly 30% of ARV covers profit and all transaction costs, which breaks down on very cheap or very expensive homes. Use it to filter leads fast, then run a full profit analysis before you make an offer.
When should I use 65% or 75% instead of 70%?
Use 65% when you want a bigger safety margin: expensive money, uncertain rehab scope, or a cooling market. Use 75% only when costs are genuinely lower, like agent-free selling, cheap financing, or a fast flip in a hot market.
Does the 70% rule include closing costs?
Implicitly, yes. The 30% haircut is meant to absorb buying costs, holding costs, selling costs, and your profit together. It does not price them individually, which is why a full flip profit analysis should follow before you commit.
FlipperPro's house flipping software computes your MAO automatically on every lead, alongside live comps, rehab estimates, and full profit projections.