The 70% rule formula
Maximum offer = ARV × 70% − Repair costs
The 30% left over is meant to cover holding costs, closing costs on both ends, agent commissions, financing and your profit. It's a rule of thumb for screening deals quickly.
Example
Comparable renovated homes sell for $300,000 and the house needs $45,000 of work. 70% of $300,000 is $210,000; subtract repairs and your maximum offer is $165,000. At an asking price of $180,000 you'd need to negotiate $15,000 off.
When to adjust the percentage
In expensive markets, 75–80% can still leave a healthy profit because fixed costs are a smaller share of the price. On cheap houses, 65% is safer. Always check the final number with a full budget of your actual costs.
Common questions
Where does ARV come from?
From recent sales of renovated, comparable homes nearby, ideally within the last six months and a half-mile radius.
Does the 70% rule work for BRRRR?
It's a common starting point, since a refinance usually caps out at 70–75% of ARV. See the BRRRR calculator for the full picture.