1. What Is The 70 Percent Rule?

The 70 Percent Rule is a guideline used by real estate investors to determine the maximum price they should pay for a property intended for flipping. It accounts for the After Repair Value (ARV) and estimated repair costs to ensure profitability.

2. How Does The Calculator Work?

The calculator uses the 70 Percent Rule formula:

Where:

• \( \text{ARV} \) — After Repair Value in USD
• \( \text{Repair Costs} \) — Estimated repair costs in USD

Explanation: The rule suggests that an investor should pay no more than 70% of the ARV minus the repair costs to allow for a 30% margin to cover other expenses and profit.

3. Importance Of The 70 Percent Rule

Details: This rule helps investors quickly evaluate potential deals, mitigate risks, and ensure there is enough buffer for unexpected costs and a reasonable profit margin.

4. Using The Calculator

Tips: Enter the estimated After Repair Value (ARV) and the total repair costs in USD. Both values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: Why use the 70 Percent Rule?
A: It provides a quick, conservative estimate to help investors avoid overpaying and ensure profitability after all costs.

Q2: Is the 70 Percent Rule always applicable?
A: While it's a useful guideline, market conditions, location, and individual circumstances may require adjustments.

Q3: What is included in repair costs?
A: Repair costs include all expenses needed to renovate and prepare the property for sale, such as materials, labor, permits, and contingencies.

Q4: How is ARV determined?
A: ARV is estimated based on comparable sales (comps) of similar properties in the same area that have been recently sold after renovations.

Q5: Can the percentage vary?
A: Yes, some investors may use a different percentage (e.g., 65% or 75%) based on their risk tolerance and market conditions.