Maximum Purchase Price (70% Rule)
It is the highest price you should pay for a flip if you want room for rehab, carry, and profit.
Formal definition
The 70% rule estimates maximum purchase price as (ARV × 0.70) minus estimated rehab budget — a quick flip underwriting guardrail.
Why it matters
Overpaying at purchase is the most common flip mistake — the 70% rule forces discipline before emotion wins.
Where you see it
- House-flipping courses and podcasts
- Hard-money lender deal screens
- Real estate investor meetups
- Wholesale assignment calculators
- Flip profit spreadsheet templates
Worked example
- ARV: $300,000.
- Rehab budget: $50,000.
- 70% rule max = ($300,000 × 0.70) − $50,000 =
- Interpretation: Paying above
How Business metrics calculates it
70% of ARV − Rehab budget. A screen, not a law.
Where people fool themselves
Same math as the 70% rule article: if you already paid above the screen, the calculator will tell you. Do not “adjust ARV” until the screen clears. Adjust the bid or walk.
Run it on your own numbers: the Fix & Flip calculator.