The 70% rule is the first formula most new investors learn: pay no more than 70% of the after-repair value (ARV) minus the repairs. It is simple and quick, and for years it kept flippers out of bad deals. In 2025–26, though, a common complaint in investor communities is that offers built on the 70% rule are "not even in the same stadium" as what sellers expect. So does it still work?
01What is the 70% rule?
Maximum offer = ARV × 70% − repairs. On a house worth $250,000 once fixed, needing $35,000 of work: $250,000 × 70% = $175,000, minus $35,000 = $140,000. The missing 30% ($75,000) is meant to pay the investor's loan, holding costs, buying and selling costs and profit.
02How wholesalers use it: MAO
A wholesaler sells the contract to a flipper, so the wholesaler's fee has to come out too: MAO = ARV × 70% − repairs − assignment fee. With a $12,000 fee the wholesaler's maximum offer in the example above is $128,000. Many wholesalers open lower, around 85% of their MAO, to leave room to negotiate.
03Why the 70% rule often fails in 2026
- Selling costs, interest and insurance have all risen, so the 30% margin is used up faster.
- Hot markets are crowded with buyers. Experienced investors report flips at 75–85% of ARV minus repairs.
- The rule ignores the timeline. A six-month flip and a twelve-month flip have very different holding costs.
- It hides bad inputs. A high ARV or a low repair estimate makes any percentage look fine.
04Different buyers pay different percentages
The percentage is really the end buyer's number, not yours. Flippers in slow markets may pay 65%. Typical flippers pay 70%. Some flippers and landlords will pay 75%. Buy-and-hold landlords can go to 80% because they never pay a selling commission. Know who you are selling to before you write the offer.
05The strike-price method experienced investors use
A lender with two decades of flipping explained it in a 2025 forum thread: never use a percentage; build the offer from real costs. Strike price = ARV − your profit − repairs (from a contractor's scope of work) − contingency − loan and holding costs − buying and selling costs. That is the highest price you can pay and still make your profit, whatever the market does.
06A worked example
ARV $265,000. Repairs $40,000 plus 10% contingency = $44,000. Six months with a hard-money loan at 11% and 2 points on 90% of the price and all the repairs. Holding $450 a month. Buying costs 2%, selling costs 7%. Target profit $30,000. The fix and flip calculator works this out to a strike price of about $153,000. The 70% rule would say $141,500 (ARV × 70% − $44,000), about $11,500 lower: this is why offers built only on 70% often lose to buyers who run the full numbers. On a slower or heavier project the gap can go the other way, which is why the full math matters.
07Use the rule as a filter, not a decision
- Screen quickly with the 70% rule (or 75–80% for landlords).
- For every deal that passes, run the strike price with real costs.
- Check the ARV against the weakest comp and the repairs against a contractor.
- Offer below your maximum, and walk away above it.
Both calculators are free: the wholesale MAO calculator for quick offers by buyer type, and the fix and flip calculator for the full strike price.
