The 70% rule is the fastest way to know if a flip leaves enough room for profit. Experienced investors use it to screen deals in minutes before digging deeper.
The formula
Maximum allowable offer = (ARV x 70%) minus rehab costs.
ARV is the after repair value: what the home should sell for once renovated. The remaining 30% covers closing costs, holding costs, selling costs and your profit.
A quick example
- ARV: $340,000
- 70% of ARV: $238,000
- Rehab budget: $45,000
- Maximum offer: $193,000
If the seller wants $230,000, the deal probably does not work as a flip unless the ARV is higher or the rehab can be reduced.
When to adjust the rule
In higher-priced Atlanta neighborhoods, some investors work at 75% because the dollar profit is larger. On riskier or older properties, 65% gives you more cushion. Use the rule as a filter, then run full numbers.
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