70% Rule Calculator (MAO)
How the 70% rule works
MAO = (ARV × 0.70) − rehab − holding − closing. The 30% buffer between 70% of ARV and the offer is the institutional safety margin — it absorbs the things that go wrong: rehab overrun, timeline slippage, comp slippage, market-cycle risk.
Operators who pay above the 70% line are running closer to break-even than their spreadsheet says. The number to track is not the offer — it is the spread between the offer and the theoretical max.
For full Fix & Flip underwriting see /strategies/fix-and-flip. For ARV methodology see how to calculate ARV.
Frequently asked questions
What is the 70% rule in real estate?
The 70% rule is a fix-and-flip discipline that caps the maximum allowable offer at 70% of After Repair Value (ARV) minus rehab budget, holding costs, and closing costs both sides. The 30% buffer absorbs rehab overruns, timeline slippage, and market-cycle risk. Operators who pay above the line are running closer to break-even than their spreadsheet says.
Should I use 65%, 70%, or 75%?
Use the multiplier that matches your market and risk tolerance. 65% is conservative — appropriate for slower markets (90+ days on market) or first-time flippers. 70% is the institutional standard. 75% is aggressive — appropriate only in very hot markets with confirmed retail buyer demand and proven contractor execution. Going above 75% leaves no margin for error.
What is MAO?
MAO stands for Maximum Allowable Offer. It is the highest price you can pay for a fix and flip property and still hit your target profit margin. The 70% rule produces an MAO that targets roughly 20–25% gross profit margin on ARV.
Does the 70% rule work in every market?
No. In ultra-hot markets where median days-on-market is under 30 days, 70% is often too conservative — competitive bidders will outbid you and the deal goes to someone with thinner margin assumptions. In slow markets with 90+ DOM, 70% is too aggressive — carrying costs compound. The right multiplier is market-specific.
What does the 70% rule miss?
Three things. (1) Hard-money carry cost beyond the initial holding estimate. (2) Rehab budget overruns. (3) The opportunity cost of capital tied up in the project. DealIntel runs a Monte-Carlo stress test on each of these so the MAO accounts for likely scenarios — not just the base case.