Real Estate

House Flipping Calculator (70% Rule)

Check whether a flip leaves enough margin.

By TheCalcTools Updated Formula checked and tested

Your numbers

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Your results

Maximum offer (70% rule)
Maximum offer (70% rule)
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Total project cost
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Projected profit
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Return on total cost
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House Flipping Calculator (70% Rule) by TheCalcTools

How the House Flipping Calculator (70% Rule) works

Enter the expected resale value after repairs, the repair budget, your purchase price, holding costs and selling costs.

The 70% rule says a flipper should pay no more than 70% of ARV minus repairs.

The calculator also shows the profit from your actual numbers.

The formula

maximum offer = ARV × 70% − repairsprofit = ARV − purchase − repairs − holding − selling costs

Worked example

Using the default values shown in the calculator:

After-repair value (ARV)$350000
Repair costs$50000
Your purchase price$200000
Holding costs (loan, taxes, utilities)$12000
Selling costs (% of ARV)7 %
  1. 70% of $350,000 = $245,000, less $50,000 repairs: a maximum offer of $195,000.
  2. With a $200,000 purchase, total cost is $286,500.
  3. Projected profit = $63,500, a return of 22.2%.

Result:

Maximum offer (70% rule)$195,000
Total project cost$286,500
Projected profit$63,500
Return on total cost22.2%

Frequently asked questions

Is the 70% rule reliable?

It is a rule of thumb. Markets with high prices or high renovation costs may need a different percentage.

What risks should I include?

Cost overruns, delays, market changes and financing costs can erase the margin. Add a contingency to repairs.

Sources and further reading

Rental Property ROI CalculatorEstimate the first-year return on a rental property: net operating income, cap rate… Home Renovation ROI CalculatorCheck whether a home improvement pays for itself: compare its cost with the resale… Cash-on-Cash Return CalculatorHow much cash does the property pay you each year relative to the cash you put in? Rental Yield CalculatorHow much does a rental property earn compared with its price? Cap Rate CalculatorCompare income properties on a like-for-like basis Gross Rent Multiplier and 1% Rule CalculatorTwo quick screens for rental properties

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This calculator gives estimates for information only. It is not financial advice, and your lender's or provider's figures will govern. Rates, fees and rules vary. See our disclaimer.