The 70% Rule in house flipping
The 70% rule is a widely accepted real estate guideline used to determine the maximum price an investor should pay for a fixer-upper. It states that the purchase price should not exceed 70% of the After Repair Value (ARV) minus estimated renovation costs.
For example, if a home's ARV is $300,000 and the repair budget is $50,000, the Maximum Allowable Offer (MAO) is: ($300,000 * 0.70) - $50,000 = $160,000. Paying more than this reduces your buffer for unexpected costs.