70% Rule Calculator (MAO)
How the 70% rule works
MAO = (ARV × 0.70) − rehab − holding − closing. The 30% buffer between 70% of ARV and the offer is the institutional safety margin — it absorbs the things that go wrong: rehab overrun, timeline slippage, comp slippage, market-cycle risk.
Operators who pay above the 70% line are running closer to break-even than their spreadsheet says. The number to track is not the offer — it is the spread between the offer and the theoretical max.
For full Fix & Flip underwriting see /strategies/fix-and-flip. For ARV methodology see how to calculate ARV.
Frequently asked questions
What is the 70% rule in real estate?
The 70% rule is a fix-and-flip discipline that caps the maximum allowable offer at 70% of After Repair Value (ARV) minus rehab budget, holding costs, and closing costs both sides. The 30% buffer absorbs rehab overruns, timeline slippage, and market-cycle risk. Operators who pay above the line are running closer to break-even than their spreadsheet says.
Should I use 65%, 70%, or 75%?
Use the multiplier that matches your market and risk tolerance. 65% is conservative — appropriate for slower markets (90+ days on market) or first-time flippers. 70% is the institutional standard. 75% is aggressive — appropriate only in very hot markets with confirmed retail buyer demand and proven contractor execution. Going above 75% leaves no margin for error.
What is MAO?
MAO stands for Maximum Allowable Offer. It is the highest price you can pay for a fix and flip property and still hit your target profit margin. The 70% rule produces an MAO that targets roughly 20–25% gross profit margin on ARV.
Does the 70% rule work in every market?
No. In ultra-hot markets where median days-on-market is under 30 days, 70% is often too conservative — competitive bidders will outbid you and the deal goes to someone with thinner margin assumptions. In slow markets with 90+ DOM, 70% is too aggressive — carrying costs compound. The right multiplier is market-specific.
What does the 70% rule miss?
Three things. (1) Hard-money carry cost beyond the initial holding estimate. (2) Rehab budget overruns. (3) The opportunity cost of capital tied up in the project. DealIntel runs a Monte-Carlo stress test on each of these so the MAO accounts for likely scenarios — not just the base case.
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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.