70% Rule Calculator

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How to use the 70% Rule Calculator

1
Enter the after-repair value
Use recent sales of similar renovated homes nearby.
2
Enter repair costs
Your rehab estimate, ideally with a contingency included.
3
Keep 70%, or adjust
Some investors use 75% or more in expensive or fast-moving markets and 65% in slow ones.
4
Compare with the asking price
Enter the seller's price to see whether it passes the rule.

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The 70% rule says to pay no more than 70% of the after-repair value, minus repairs. The other 30% is meant to cover your profit, closing costs, holding costs and financing. It's a quick screen, not a full analysis.

Worked example

A house should sell for $380,000 once renovated and needs $55,000 of work. Seventy percent of $380,000 is $266,000. Subtract repairs and the maximum offer is $211,000.

The seller is asking $240,000, which is $29,000 above the rule. The buyer either counters near $211,000 or runs the Deal Analyzer to see whether the deal works anyway.

The formula

Max offer = ARV × 70% − Repairs

Common mistakes

Treating the rule as a target. It's a ceiling for screening deals. Run the full numbers before you commit.
Using it the same way everywhere. The fixed 30% covers more in a $600,000 market than in a $150,000 one. The Max Offer Calculator lets you set each cost yourself.
Leaving contingency out of repairs. The rule assumes your repair number is realistic.

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