How this number is made
The 70 percent rule says do not pay more than 70% of the after-repair value, minus repairs. It is a bargaining screen used by flippers. It ignores holding costs, selling costs, and your actual profit target.
- After-repair value is the sale price once the work is done, not the price today.
- Repairs are the work required to deserve that value.
Formula
Maximum offer = after-repair value × 0.70 − repairs.
Worked example
With the figures already in the form, highest offer under the rule is $170,000.
Questions
Why 70?
It is a custom that leaves about 30% for costs and profit in markets where that custom was formed. In an expensive market the land of the rule is too strict. In a cheap one it may not be strict enough.
Is this an appraisal?
No. It is a rule of thumb. The flip-profit page is where you type the actual costs.