Get a quick first-pass purchase ceiling before you build a detailed budget. Start at 70% of the finished value, subtract repairs, and compare a more conservative or aggressive assumption.
Purchase ceiling = ARV × rule percentage − repair costs
WORKED EXAMPLE
A $300,000 ARV at 70% leaves $210,000 before repairs. Subtracting $45,000 of repairs produces a $165,000 purchase ceiling. The same property screens at $150,000 using 65%, or $180,000 using 75%.
How the 70% rule works
The shortcut reserves part of the after-repair value for expenses and profit, then removes the renovation budget to estimate a purchase price. The default leaves 30% of ARV before repairs, but that 30% is not all profit. It must absorb financing, transaction costs, holding costs, selling expenses, and the return you want. Use the percentage control to see how sensitive the offer is to that broad allowance.
Why the rule is a screen, not an underwriting result
A percentage shortcut does not know local taxes, the project timeline, the buyer’s financing, or the work needed to reach ARV. Low-value houses can have fixed costs that consume a much larger percentage of the sale price. Expensive or slow projects can also need more room. Once a property passes an initial screen, replace the combined allowance with an itemized flip budget and stress-test the resale price and rehab cost.
When to move to a different calculator
Use MAO when you want an additional wholesale fee deducted after the purchase ceiling. Use the wholesale calculator when the end buyer has a specific dollar profit target and known expenses. Use the fix and flip calculator to evaluate a real purchase price instead of solving for a rule-based maximum. These tools answer related questions, but their outputs should not be combined in a way that subtracts the same costs twice.
A LITTLE MORE CLARITY
Frequently asked questions
Does the 70% rule guarantee a profitable flip?
No. It is a screening assumption. Actual profit depends on resale value, renovation, financing, holding time, and transaction costs.
Can I change the 70% percentage?
Yes. The calculator starts at 70% and lets you use another percentage. The 65%, 70%, and 75% comparison keeps the underlying ARV and repair budget constant.
Is an assignment fee included?
No. This page calculates the buyer’s rule-based purchase ceiling. Use the MAO calculator to deduct a separate wholesale fee.
