70% rule
A shortcut used by flippers: pay at most 70% of after-repair value, minus rehab costs. Meant to leave room for profit and unexpected costs.
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See how it worksWhere this comes up: on the market
Part 1 of 4
Why a seller cares
The 70% rule is how most flip offers are built: 70% of the after-repair value, minus the rehab. If a flipper is offering on your home, this is almost certainly the arithmetic, and it tells you where their number came from.
Part 2 of 4
A simple example
A flipper sees a $300,000 ARV and $50,000 of work. Seventy percent of $300,000 is $210,000, minus $50,000, is a $160,000 offer.
| The arithmetic | The number |
|---|---|
| After-repair value | $300,000 |
| Times 70% | $210,000 |
| Minus the rehab | $160,000, the offer |
The 70% rule leaves the flipper 30% of the finished value for profit, costs and risk. Your price is what is left.
Part 3 of 4
What people get wrong
That the 30% is all profit. Selling costs, holding costs and surprises come out of it; the profit is what survives.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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