Flip 70% rule calculator
Enter ARV and repairs for the maximum offer, then your costs for the real profit.
Every number here is an example, not a typical cost — use your own quotes. Set the loan to 0% for an all-cash purchase.
What is the 70% rule in house flipping?
The 70% rule says a flipper should pay no more than 70% of a house's after-repair value (ARV) minus the cost of the repairs: maximum offer = ARV × 0.70 − repairs. The remaining 30% of ARV is meant to cover everything else, namely the costs of buying, holding, financing and selling the house, and the profit. Example: a house that will be worth $200,000 after repairs needing $30,000 of work gives $140,000 − $30,000 = $110,000, leaving $60,000 for costs and profit.
Where does the 70% rule come from?
We could not find an authoritative source. We looked for it in government and lender documents and did not find it in the IRS publications we read, and the pages that explain it are investor blogs and personal-finance sites that call it a rule of thumb developed by flippers over years of experience, without naming an author, a book or a date. So treat 70% as a convention among investors, not as a standard from HUD, FHA, a lender or a textbook. We do not claim it is tied to the FHA 203(k) program or to any other published guideline, because we found nothing that says so.
How does the full profit model work?
The rule only sets a ceiling on the offer. The model below the answer adds up the costs the rule leaves out. Loan = the share of price plus repairs that you borrow. Points = a percentage of the loan paid up front. Interest = loan × rate × months ÷ 12, treated as interest-only on the whole loan for the whole project, which is slightly high because repair money is usually drawn in stages. Holding costs = the monthly taxes, insurance, utilities and similar bills times the months you own the house. Selling costs = a percentage of ARV for agent commissions and closing costs. Net profit = ARV minus all of these and the purchase and repairs. Cash you put in = all costs minus the loan. Return on cash = profit ÷ cash in. The annualized figure compounds that return, (1 + return)^(12 ÷ months) − 1; it assumes you could repeat the same project, which is rarely true, so use it for comparing deals, not for forecasting. All of this model is our derivation, not a published formula.
Worked example: what does 70% really leave you?
Take ARV $200,000, repairs $30,000, the offer at the rule's ceiling of $110,000, buying costs $3,000, six months, $900 a month to hold, an 80% loan at 11% interest-only with 2 points, and selling costs of 7% of ARV. Loan points come to $2,240, interest $6,160, holding $5,400 and selling $14,000. The net profit is $29,200 on $44,800 of your own cash, a return of 65.2% for the project. Pay cash instead and the profit is $37,600 on $148,400, or 25.3%. If the same flip takes ten months rather than six, profit falls to $21,493. These are example numbers, not typical costs.
How much can I offer if I want a set profit?
Profit changes in a straight line with the price you pay, so the calculator solves for the offer directly instead of guessing. With the example costs and a target of $25,000, the highest offer is $113,962, compared with $110,000 from the rule. The rule and the target can differ a lot, because the rule uses one percentage for every deal while real holding and financing costs depend on the project length, the loan and the price.
What are the limits of the 70% rule?
First, it depends entirely on ARV, which is an estimate from comparable sales; in the example a 5% lower ARV of $190,000 cuts the profit at the same offer from $29,200 to $19,900, because the loan, points and holding costs do not shrink with it. Second, a fixed 30% cannot fit every deal; as a matter of arithmetic (our reasoning, not a published finding), costs that do not scale with price, such as monthly holding bills, take a larger share of a cheap house than of an expensive one. Third, it ignores time and financing, which the model on this page adds. Fourth, taxes: IRS Publication 544 says property held mainly for sale to customers in a trade or business is not a capital asset, so profit from regular flipping can be taxed as ordinary business income rather than as capital gain; this page leaves income tax out, so ask a tax professional. Fifth, repair costs are the biggest unknown on an older house; a rule built on the repair estimate is only as good as that estimate.
What should I use for ARV?
ARV is the price you expect the house to sell for after the work is done, based on recent sales of similar houses nearby in a comparable condition. An agent's comparative market analysis or an appraiser's opinion is a better basis than a listing price or a neighbour's guess. It is the most important number in the form, so try it a few percent lower as a check.
Estimates for planning only — not financial, tax or legal advice. Your lender or tax professional decides. The 70% rule is an investor rule of thumb with no published standard behind it; the profit model is our own derivation. Sources: IRS Publication 544 (2025), chapter 2, “Noncapital Assets”; descriptions of the rule on BiggerPockets and Bankrate (investor and consumer-finance sites, not standards). See also the rental property calculator, mortgage points calculator, ROI calculator and home sale net proceeds calculator. How we check our calculators.