The 70% rule is a quick screening formula for flips and wholesale deals: your maximum offer equals 70% of the after-repair value, minus the cost of repairs. The 30% held back is not arbitrary — roughly 10 points cover holding and selling costs, and about 20 points are profit and a cushion for surprises. It is a screen, not a law: experienced investors adjust the percentage deliberately for their market and exit, and can say why.
The formula / structureMaximum Offer = (ARV × 0.70) − Repairs
70% Rule: a worked example
Worked example. ARV $200,000, repairs $30,000 → ($200,000 × 0.70) − $30,000 = $140,000 − $30,000 = $110,000 maximum offer. Offering $135,000 instead would consume $25,000 of the 30% reserve — most of the room meant for costs and profit.
What affects 70% Rule
- Price band — on very cheap homes, fixed costs take a bigger share, so investors often use a lower percentage
- Market speed and competition
- The investor's own costs (cheaper crews and financing change the math)
- Exit strategy — the rule is built for flips and wholesaling, not buy-and-hold
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