The 70% Rule Explained: A Fix-and-Flip Investor's Best Friend

The 70% rule is the most widely used formula for determining your maximum allowable offer. Learn how to apply it correctly.

The 70% rule is a simple but powerful guideline used by fix-and-flip investors to determine the maximum price they should pay for a property. The formula is straightforward: Maximum Allowable Offer (MAO) = ARV × 0.70 − Estimated Repair Costs.

For example, if a property has an ARV of $300,000 and needs $50,000 in repairs, the MAO would be $300,000 × 0.70 − $50,000 = $160,000. This leaves enough margin to cover holding costs, closing costs, and a healthy profit.

The 70% threshold accounts for roughly 30% in combined expenses: 10% for closing and holding costs, and 20% for profit margin. Some experienced investors adjust this percentage based on market conditions — in hot markets they might go to 75%, while in uncertain markets they tighten to 65%.

The challenge has always been applying this rule at scale. Manually calculating MAO for each property in a pipeline of hundreds of leads is time-consuming and error-prone. This is where automation becomes critical — platforms like Vortonic can screen entire markets against the 70% rule in seconds, surfacing only the deals that meet your specific criteria.

Remember: the 70% rule is a starting point, not a guarantee. Always verify your ARV with solid comps and get accurate repair estimates before making an offer.