The 70% Rule
Definition
The 70% rule is the standard fix-and-flip pricing discipline: Maximum Allowable Offer (MAO) = (ARV × 0.70) − rehab budget − holding costs − closing costs (both sides) − wholesale fee. The 30% buffer absorbs rehab overruns, timeline slippage, comp slippage, and market-cycle risk. Operators who pay above the 70% line are running closer to break-even than their spreadsheet suggests, with no margin for the things that always go wrong.
Formula
Worked example
ARV = $480,000. ARV × 0.70 = $336,000. Rehab budget $65,000. Holding costs $14,000 (6 months hard money carry + utilities + taxes). Closing costs $18,000 (3% buy + 6% sell on $480k). MAO = $336,000 − $65,000 − $14,000 − $18,000 = $239,000. Any offer above $239k erodes the 30% safety buffer.
How DealIntel uses it
DealIntel computes MAO automatically on every fix-and-flip evaluation with the same inputs and surfaces the gap between offer price and MAO. Deals priced inside the 30% buffer pass; deals outside it trigger a 'review terms' or 'pass' verdict.
Related terms
- After Repair Value · ARVThe estimated market value of a property after planned renovations are complete.
- Comparable Sales · CompsRecent sales of similar properties used to estimate the market value of a subject property.
- Hard Money LoanShort-term, asset-collateralized real estate financing from a private lender — fast to close, higher-cost.
Matt Abadi is the founder of DealIntel. He leads the development of the platform's six-strategy underwriting engine, 25-point Kill List, and Monte-Carlo financial model — the institutional analysis stack DealIntel applies to every fix and flip deal. DealIntel was founded in 2025 with the central thesis that knowing when not to invest is the most valuable number on the page.