What is 70% Rule?
The 70% rule is a quick screen flippers and BRRRR investors use to set a maximum purchase price: pay no more than 70% of the after-repair value (ARV) minus your rehab budget.
It builds in a rough margin for holding costs, financing, selling costs, and profit — so you can reject bad deals fast before running a full analysis.
Formula
Max offer = (0.70 × After-Repair Value) − Estimated rehab cost.
How to read it
- Lower the percentage (e.g. 65%) in slow or high-cost markets for a bigger safety margin; some experienced flippers stretch to 75% on strong deals.
- The rule is a starting filter, not a final number — always confirm with a full deal analysis before you offer.
- Accurate ARV and rehab estimates matter most; the rule is only as good as those inputs.
Frequently asked questions
- Why 70%?
- The 30% gap is meant to absorb closing costs, holding costs, financing, agent commissions, and profit. It's a rule of thumb — adjust the percentage to your market and margins.
- Does the 70% rule work for BRRRR?
- Yes — because BRRRR refinances at ~75% of ARV, buying at 70%-minus-rehab usually leaves little to no cash in the deal after the refinance.