Where the 70% comes from
The 30% that's left over is meant to cover everything except repairs: the flipper's profit, holding costs while they rehab and sell, closing costs on both ends, agent commissions and financing costs. It became popular because it's quick and conservative on typical mid-priced houses.
When 70% is wrong
The rule doesn't scale. On a $120,000 house, 30% may not cover fixed costs and a reasonable profit; on a $700,000 house, 30% can leave far more margin than buyers need, so competitive buyers pay 75–80%. Interest rates and hold times also change what's left: a buyer financing 90–100% of the cost at 11% interest has very different costs from an all-cash buyer.
That's why the calculator shows the 70% rule next to a detailed MAO that itemizes holding, closing and financing costs and solves for your buyer's target profit. If the two numbers disagree by more than about 10% of ARV, double-check your inputs.
Adjusting the percentage for your market
Change the rule percentage in the calculator to match what buyers in your market actually pay. A quick way to find it: ask two or three active buyers what they paid on recent flips, as a percentage of ARV minus repairs.
- 65%: higher-risk areas, heavy rehabs, slow resale markets or low price points.
- 70%: the common default for typical single-family flips.
- 75–80%: hot markets, higher price points, light cosmetic rehabs.
Frequently asked questions
What is the 70% rule in wholesaling?
It's a rule of thumb for the most an end buyer will pay: 70% of ARV minus repairs. Wholesalers subtract their assignment fee from that number to get their maximum allowable offer (MAO) to the seller.
Does the 70% rule include closing costs?
Yes, implicitly. The 30% margin is meant to cover profit, holding, closing, selling and financing costs. The rule doesn't itemize them, which is why it can be off for very cheap or expensive houses.
Is the 70% rule still realistic?
In many markets buyers pay 75% or more. Use the rule as a sanity check and the detailed method to price deals off real costs and current interest rates.
How do I calculate MAO with the 70% rule?
Multiply ARV by 0.70, subtract the repair estimate, then subtract your wholesale fee. Example: $300,000 × 0.70 = $210,000; minus $49,500 repairs = $160,500; minus a $10,000 fee = $150,500 MAO.