How to Use the 70 Percent Rule
To use the 70 percent rule, multiply after repair value by 70% and subtract repair costs. Use the result as a screening estimate only, then build a full model with financing, holding costs, selling costs, contingency, and comps.
Estimates are based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, tax, or lending advice.
Run the number, then pressure-test the assumptions.
To use the 70 percent rule, multiply after repair value by 70% and subtract repair costs. Use the result as a screening estimate only, then build a full model with financing, holding costs, selling costs, contingency, and comps.
Use this page to understand the metric directionally, then compare it against financing, reserves, repair risk, cash flow, and your own constraints.
Rule-based max purchase price = ARV x 70% - repair costs
If ARV is $300,000 and repairs are $45,000, the 70 percent rule estimate is $165,000.
Use the formula inside a full deal model
DealSharp helps compare assumptions, debt service, cash flow, and risk flags so this metric is not reviewed in isolation.
Open DealSharpHow to read this number
The useful move is not treating one number as a final answer. Use it to decide which assumptions deserve more review, then compare the result against cash flow, financing, reserves, repair risk, and your own constraints.
Inputs required
- After repair value.
- Repair cost estimate.
- Rule percentage used for the screen.
Outputs explained
- Rule-based purchase threshold.
- Quick pass for deciding whether to model deeper.
- Reminder to add full flip costs before making decisions.
Assumptions to review
- ARV and repair costs are estimates.
- The rule percentage is a shortcut.
- The output is not an offer instruction.
What this tells you
- The rule can speed up first-pass flip screening.
- It leaves room for costs and margin in a simplified way.
- It should lead into full underwriting, not replace it.
What this does not tell you
- It ignores financing, holding, selling, timeline, and market risk.
- It can be too strict or too loose depending on market and project.
Common mistakes
- Using the rule instead of a full model.
- Using unverified ARV.
- Ignoring timeline and selling costs.
FAQ
When should I use the 70 percent rule?
Use it for a quick first screen, then review full costs, comps, financing, and timeline.
Does the 70 percent rule apply to rentals?
It is mainly a flip shortcut. Rentals usually need cash flow, cap rate, DSCR, and expense analysis.
Run the full deal before deciding
This page helps with one metric or workflow. DealSharp is built for full real estate deal analysis: assumptions, financing, cash flow, repair scenarios, DSCR, cap rate, and risk flags based on your inputs.
Open DealSharpDisclaimer
DealSharp provides calculation and scenario-modeling tools for informational purposes only. Outputs are estimates based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, lending, tax, or accounting advice. Verify important decisions with qualified professionals.