The numbers · Flip calculator (70% rule) · Capital
The profit is made at the purchase.
The 70% rule sets your ceiling; the waterfall shows what survives financing, holding and selling costs. Move your offer and watch the margin breathe.
Inputs
After-repair value (ARV)$300,000
Repair budget$40,000
The rule70% rule
Your offer$170,000
Project length6 months
Financing rate11.0% + 2pts
Selling costs8.0% of ARV
Financing modeled as hard money at 85% of cost, quoted rate + 2 points. Holding at $450/month (taxes, insurance, utilities). Tighten every number to your market before offering.
The profit waterfall at your offer
Sale at ARV
$300k
Purchase
−$170k
Repairs
−$40k
Financing
−$13k
Holding
−$3k
Selling costs
−$24k
Profit
$50k
Max allowable offer
$170k
70% of ARV minus repairs — the screening ceiling
Your offer vs. MAO
+$0
At or under the rule
Projected margin
16.6%
$50k pre-tax on a 6-month project
The verdict
A strong flip on paper — $50k at a 16.6% margin, and you're at or under the 70% rule's $170k ceiling. Strong paper margins earn a second look at the ARV: if it's real, move.