1. What is the 70% House Flipping Rule?

The 70% rule is a guideline used by real estate investors to determine the maximum price they should pay for a property intended for flipping. This rule helps ensure there's enough profit margin after accounting for repair costs and other expenses.

2. How Does the Calculator Work?

The calculator uses the house flipping formula:

Where:

• \( ARV \) — After Repair Value (estimated value after renovations)
• \( Repair\ Costs \) — Estimated cost of repairs and renovations
• \( 0.7 \) — The 70% multiplier accounting for profit and holding costs

Explanation: This formula ensures you leave room for profit, closing costs, carrying costs, and unexpected expenses while still making the deal worthwhile.

3. Importance of the 70% Rule in House Flipping

Details: Following the 70% rule helps investors avoid overpaying for properties, maintain healthy profit margins, and account for market fluctuations and unexpected costs that often arise during renovation projects.

4. Using the Calculator

Tips: Enter realistic ARV based on comparable properties in the area. Get accurate repair estimates from contractors. All values must be valid (non-negative numbers).

5. Frequently Asked Questions (FAQ)

Q1: Is the 70% rule always applicable?
A: While it's a good guideline, market conditions, location, and experience level may require adjustments to this rule.

Q2: What expenses does the 30% account for?
A: It covers profit margin, closing costs, holding costs, financing costs, and a contingency for unexpected expenses.

Q3: When should I use a different percentage?
A: In competitive markets, investors might go to 75-80%, while in riskier markets or for inexperienced flippers, 65% might be more appropriate.

Q4: How accurate should my ARV estimate be?
A: Your ARV should be based on recent comparable sales of similar renovated properties in the same area, preferably from the last 3-6 months.

Q5: What if my calculated max offer is below the asking price?
A: This may indicate the property is overpriced for a flip, or you need to re-evaluate your repair estimates and ARV calculation.