The 70% Rule
Definition
The 70% rule is the standard fix-and-flip pricing discipline: Maximum Allowable Offer (MAO) = (ARV × 0.70) − rehab budget − holding costs − closing costs (both sides) − wholesale fee. The 30% buffer absorbs rehab overruns, timeline slippage, comp slippage, and market-cycle risk. Operators who pay above the 70% line are running closer to break-even than their spreadsheet suggests, with no margin for the things that always go wrong.
Formula
Worked example
ARV = $480,000. ARV × 0.70 = $336,000. Rehab budget $65,000. Holding costs $14,000 (6 months hard money carry + utilities + taxes). Closing costs $18,000 (3% buy + 6% sell on $480k). MAO = $336,000 − $65,000 − $14,000 − $18,000 = $239,000. Any offer above $239k erodes the 30% safety buffer.
How DealIntel uses it
DealIntel computes MAO automatically on every fix-and-flip evaluation with the same inputs and surfaces the gap between offer price and MAO. Deals priced inside the 30% buffer pass; deals outside it trigger a 'review terms' or 'pass' verdict.
Related terms
- After Repair Value · ARVThe estimated market value of a property after planned renovations are complete.
- Comparable Sales · CompsRecent sales of similar properties used to estimate the market value of a subject property.
- Hard Money LoanShort-term, asset-collateralized real estate financing from a private lender — fast to close, higher-cost.
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