The 70 percent rule house flipping investors rely on is a quick formula for figuring out the most you should pay for a property before rehab and resale. It's not a law, and it's not how every file underwrites, but it's a fast gut check before you tie up earnest money. This guide walks through the formula, a worked example, and the situations where it works great and where it steers you wrong.
What Is the 70 Percent Rule?
The rule says your maximum offer should equal 70% of the property's after repair value (ARV), minus your estimated repair costs. The goal is to leave room for closing costs, holding costs, financing costs, and a profit margin on top of the rehab budget.
Maximum Offer = (ARV x 70%) − Estimated Repair Costs
If you don't already know how appraisers and investors arrive at ARV, read what ARV means before you run any numbers.
Worked Example
Here's a simple, round-number illustration.
ARV: $300,000
70% of ARV: $210,000
Estimated repairs: $40,000
Maximum offer: $210,000 − $40,000 = $170,000
In this example, paying $170,000 or less for the property theoretically leaves enough margin to cover closing costs, carrying costs, your financing, and still walk away with profit after the resale. Pay more than that and your margin shrinks fast.
Why the 30% Buffer Exists
That 30% isn't profit alone. It typically needs to cover:
- Buying and selling closing costs (commissions, title, transfer taxes)
- Holding costs — insurance, property taxes, utilities
- Interest and points on your fix and flip loans
- Contingency for rehab overruns
- Your actual profit
Flippers who skip the contingency line are the ones who call us mid-project asking for a rehab budget increase. Build it in from day one.
When the 70 Percent Rule Works
The rule works best on straightforward deals:
- Standard single-family resale flips in markets with solid comps
- Light-to-moderate rehab projects where repair costs are predictable
- Fast-moving markets where your hold time is short and holding costs stay low
In these cases, 70% gives you a quick, conservative screen before you spend time on a full underwriting package. If the deal clears the 70% rule and still cash-flows, it's worth a serious look — run it through our fix and flip calculator to pressure-test the numbers before you make an offer.
When It Breaks Down
The 70 percent rule house flipping investors memorize doesn't flex for every market or project type. It can mislead you in a few common scenarios:
- High-value or luxury flips. On a $900,000 ARV property, 30% is $270,000 — way more buffer than the deal actually needs. The rule can price you out of a perfectly good deal.
- Low-value properties. On a $100,000 ARV deal, 30% is only $30,000, which may not cover a full gut rehab plus holding and selling costs. The rule can make a bad deal look fundable.
- Ground-up builds and heavy additions. New construction and major additions don't follow resale-flip math at all — these need their own cost-to-value analysis. See how ground-up construction loans work.
- Slow markets or long entitlement timelines. If your hold time stretches past 12 months, your actual carrying costs can blow past what 70% assumed.
- Markets with thin comps. If ARV itself is a guess, the whole formula is built on sand.
In short, treat the 70 percent rule as a first filter, not a final answer. Compare it against actual loan-to-cost and loan-to-ARV limits, which is a different math problem — see loan to cost vs loan to ARV for how that caps your loan amount separately from your offer price.
How This Connects to Your Financing
The 70% rule tells you your maximum offer. It doesn't tell you how much we'll fund. On strong files, our fix and flip loans can reach about 90% of purchase price and up to 100% of rehab costs, subject to underwriting. That means your actual cash-to-close can be much less than the full 30% gap the rule implies.
Fix and flip and bridge loans are short-term, interest-only, typically around 12 months, and commonly priced around 9.5% to 12% plus 2 to 3 points. Rates move daily based on credit, leverage, and the property, so always check our rate and loan estimator for a current number before you finalize your offer.
First-time flippers are welcome — if that's you, read hard money loan with no experience and fix and flip loan down payment to see what to expect on cash needed and qualification. Rehab funds get released as work completes; see rehab draw schedule explained for how that works.
If You're Planning to Hold Instead of Sell
If your exit is a rental instead of a resale, the 70% rule doesn't apply at all — you'd size the deal around rent and debt coverage instead. Our DSCR rental loans are commonly priced in the 6% to 8% range depending on credit, leverage, and the property. Use the DSCR calculator to check cash flow, and read how to calculate DSCR and DSCR loan requirements if you're weighing a flip-to-rent strategy or a BRRRR plan. Investors scaling a portfolio of rentals or small multifamily may also want to look at our portfolio loans or commercial and multifamily loans.
None of this is tax or legal advice — talk to your CPA or attorney about how a flip or hold decision affects your specific situation.
What to Do Next
Run your deal through the 70% rule, then check it against real numbers with our deal analyzer and fix and flip calculator. When you're ready to move, see all our loan programs and get a quote — or call our loan officers directly at (850) 279-8588. We fund fix and flip, bridge, and construction loans nationwide in most states, including first-time flippers and eligible foreign nationals.
Frequently asked questions
Is the 70 percent rule a hard limit lenders use to underwrite flip loans?
No. It's a quick screening tool investors use to set a maximum offer. Our underwriting looks at purchase price, rehab budget, and ARV directly — not a flat 70% assumption.
Does the 70 percent rule work the same in every market?
No. It tends to overestimate the needed discount on high-value properties and underestimate it on low-value ones. Always sanity-check it against actual costs for your specific deal.
How much of the deal can BridgePoint Lending finance?
On strong files, our fix and flip loans can reach about 90% of purchase price and up to 100% of rehab costs, subject to underwriting. Rates move daily, so check the estimator for a current quote.
What if my plan is to rent the property instead of flipping it?
Then the 70% rule doesn't apply — size the deal around rent and debt coverage instead using our DSCR calculator, and ask about our DSCR rental loans.