Is 70% a rule or a goal?

A screening shortcut. The number that actually clears title and rehab is a full budget, not a tweet-length formula.

What about 75% or 65%?

Same framework — the right percentage is the one that matches your local costs, exit, and risk. See the section on when investors use 65%, 70%, or 75%.

The 70 Percent Rule in Real Estate, Formula, Example, and When Not to Use It

The 70% rule is a quick underwriting shortcut real estate investors use to estimate a maximum offer price: multiply the After Repair Value (ARV) by 70%, then subtract estimated repair costs. The result is a ballpark ceiling — not a bid — that leaves room for acquisition, rehab, soft costs, and profit. Markets with higher risk or thinner margins often require 65% or lower.

The 70% rule in real estate is a quick underwriting shortcut many fix-and-flip and wholesale investors use: take the after repair value (ARV), multiply by 70%, then subtract the estimated repair cost to get a ballpark maximum price envelope (often discussed as a max purchase or max offer) — not a law of nature. Thin markets, expensive carry, or heavy repairs often push serious buyers toward 65% or lower, not 70%.

Read the formula, then the section on when people use 65%, 70%, or 75%— that is the question new investors ask right after they learn the headline rule.

Key takeaway

The 70% rule is a screen, not a bid. Use it to filter deals quickly, then build a full budget with real bids, soft costs, and financing before you wire money. Change the percentage to match your local risk, not your optimism.

The formula, written clearly

70% rule (ballpark)

Max offer (ballpark) = (ARV × 0.70) − estimated repairs

Some teams build in a wholesale fee by using a lower percentage or a higher repair buffer instead of changing the headline 70 — the idea is the same: leave room for acquisition, rehab, soft costs, profit, and assignment if applicable.

When investors use 65%, 70%, or 75%

The "right" percentage is not universal — it is the one that matches your risk, financing, and exit. Think in bands:

~75% (looser). Sometimes used when your numbers are already conservative elsewhere: you have a very tight ARV range, cheap carry, or a clear buyer at a known price. Still not a license to ignore soft costs.
~70% (common default). A middle ground for back-of-napkin screening on ordinary SFR rehabs in liquid markets where the rule is well understood by other investors.
~65% (tighter). Common when rehab risk is high, timeline is uncertain, or you need more room for selling costs, margin, and mistakes. Many wholesalers effectively run a lower implied percentage when their end buyer needs real protection.
Below 65%. Heavy structural risk, luxury or thin-liquidity exits, or long holds where interest eats the deal — the percentage is a mirror of stress, not a loyalty test.

If your only tool is "always 70%," you will overpay in bad risk situations and over-reject in narrow but real wins. The rule is a screen, not a bid button.

When the rule of thumb is useful

First-pass screening on the phone or on a list. Fast pass, fast "no" list.
Conversations with a buyer. Shared vocabulary before you open a spreadsheet.
Comparing one deal to another in the same comp band and strategy.

Where it breaks (read this before you wire money)

Low ARV, high fix — percentage rules hide absolute dollar problems.
Long rehabs where carry and interest dominate.
Luxury and thin-liquidity pockets where a few comps set the world.
Wholesale when the end buyer is razor-thin; read wholesaling for beginners for the middle-mile reality.

Worked example (one chain of round numbers)

ARV $300k, repairs $40k, rule at 70%: ($300k × 0.70) − $40k = $210k − $40k = $170k ballpark conversation ceiling. Change the same inputs to 65%: ($300k × 0.65) − $40k = $155k — a material shift that might match a riskier job or a market where your buyer needs more room. In both cases, you still add soft costs, selling, assignability, and what the buyer actually needs — the rule is not a wire instruction.

Where to practice this on real rows

Use fix & flip and wholesale on /deals, and ground-truth location with Florida, Texas, or Houston so you are not underwriting zip codes you cannot comp. OffMarket Deck shows timestamps and strategy tags so you can triage with context, not just a price.

The 70 percent rule in real estate