CalculateRealEstateROI

Flipping · Guide

70% Rule for Flipping

Why the 70% rule originated in flipping and how to bend it safely in hot markets.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Key takeaways

  • Origin of the 70% rule is flipping.
  • Includes rehab + carrying + selling costs.
  • 75% acceptable in proven hot markets.
  • 65% required in declining markets.
  • Always model sensitivity.

Core concepts

Origin

Margin to absorb cost overruns and selling costs.

Math

Purchase + rehab ≤ 70% ARV.

Adjustments

Add 1% per month expected hold; subtract 5% in declining markets.

Step-by-step framework

  1. 1Confirm ARV.
  2. 2Compute 70% ceiling.
  3. 3Offer at or below.
  4. 4Walk if not accepted.

Common mistakes to avoid

  • 75% in any market.
  • Ignoring selling costs.
  • No buffer for surprises.

Frequently asked questions

Always 70%?

Floor — go lower in soft markets.

Includes selling costs?

Yes — 6–8% of ARV.

Bend the rule?

Only with verified hot market.

Hard money rate impact?

Higher rate = lower ceiling.

Action checklist

  • ☐ARV verified.
  • ☐70% ceiling.
  • ☐Selling costs included.
  • ☐Walk-away discipline.

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