The house flipper's fastest sanity check. Enter ARV and rehab — get the max price you can offer and still hit your flip margin.
65% is conservative (hot markets, hard money). 70% is the classic flipper benchmark. 75% is aggressive (easy rehabs, strong buyer demand).
The 70% rule is a back-of-the-envelope formula flippers use to decide whether a deal is worth pursuing. It assumes that roughly 30% of a property's ARV covers the combined cost of financing, holding, closing, selling fees, and the flipper's profit margin. Whatever's left after subtracting rehab is the most you should pay to still walk away with a target profit.
The after-repair value is what the house will sell for once rehab is done. Use comps, a CMA, or a blended estimate from Zillow, Redfin, and Realtor.com.
Walk the property with a contractor. In a pinch, $30 – $50 per square foot for a cosmetic rehab is a reasonable starting range.
The 70% rule bakes in ~15% for fixed costs and ~15% for profit. If you're using hard money or the ARV is soft, tighten to 65%.
Deal Snap REI calculates the 70% rule MAO automatically on every Zillow and Redfin listing you open, using a blended ARV across all three major estimators.
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