How to use this ARV calculator
- Set the ARV. Enter a value or switch to comps and average price per square foot across recent sales.
- Add the purchase price. The tool checks it against the maximum allowable offer immediately.
- Build the rehab budget. Replace the default line items with contractor quotes and keep a contingency.
- Set deal costs. Closing percentages, commission, holding months, and monthly carrying costs.
- Read the result. Profit, margin, ROI, max offer, equity captured, and break-even sale price.
Understanding the 70% rule
The 70% rule is the quick filter most flippers use: pay no more than 70% of the ARV minus repairs. The 30% cushion covers both sides of closing, holding costs, and profit.
It is a starting point, not a verdict. Fast markets can justify 75%, and slow ones punish anything above 65%. Change the investor rule slider to see how the maximum offer moves before you negotiate.
Rehab mistakes to avoid
- Skipping the contingency - Plumbing surprises and code issues easily add 10% to 20% to a budget.
- One-number estimates - Break costs into categories and get line-item bids to catch hidden work.
- Forgetting holding costs - Every extra month of ownership eats directly into profit.
- Over-improving - Match the comps, not your taste. High-end finishes in a mid-range market do not pay back.
- Ignoring permits - Unpermitted work creates resale and title problems. Budget time and money for permits.
Frequently asked questions
How does the 70% rule work?
It caps your offer at 70% of the after-repair value minus rehab costs. The remaining 30% is meant to cover buying and selling costs, holding costs, and profit. On a $300,000 ARV with $47,850 in repairs, the maximum offer is about $162,150.
Should I always use 70% for the investor rule?
No. Hot markets with quick resale can support 75% or even 80%, while slow or rural markets deserve a more conservative 65%. The rule is a cushion, not a law. Adjust it for holding time, cost of capital, and how confident you are in the ARV.
How do I find good comps for my ARV estimate?
Use three to six recently sold homes within a mile, similar in size, age, and condition, sold in the last six months. Adjust for upgrades, lot size, and location. Avoid active listings and distressed sales unless the whole neighborhood is distressed.
What rehab costs should I include?
Everything needed to sell at the target ARV: roof, kitchen, baths, flooring, paint, systems, landscaping, permits, and a contingency. Get line-item contractor bids and add 10% to 20% for surprises. Over-improving beyond the comps wastes money.
What are holding costs and why do they matter?
They are what you pay while you own the property: loan interest, taxes, insurance, utilities, and HOA. A six-month hold at $1,800 a month is $10,800 straight off the profit. Longer timelines are the most common reason a deal turns marginal.
Estimates only. Rehab costs, ARV, and holding periods vary by market and property. Get local contractor bids and recent comps before making an offer.
