Where the 70% rule works best
The 70% rule is strongest in straightforward flip situations where you need a fast first-pass filter.
It works best when the comp set is clean, the rehab scope is moderate, and selling costs plus holding drag are reasonably predictable. In that setting, the rule keeps you from overpaying while you are still triaging a lead.
It is not meant to replace a full deal model. It is meant to stop you from wasting time on deals that never had enough room to begin with.
- Best for early-stage flip filtering.
- Best when resale value is defensible and rehab is not highly uncertain.
- Best when financing and hold time are roughly in line with normal local conditions.
Where the rule starts to break
The rule weakens when one or more cost categories stop being normal for the market or the strategy.
Higher-priced coastal markets, slow-moving resale markets, and projects with large unknowns can all require a tighter percentage. In those situations, 70% may still be a useful reference point, but not the number you should actually offer from.
Conversely, some investors using cheaper debt or smaller cosmetic turns may stretch above 70%, but only when the full model still leaves enough room after costs.
What matters most
The rule breaks when it hides real costs. If your actual financing, timeline, or renovation profile is materially different from the average flip, the shortcut should not drive the offer.
How experienced investors adapt it
Experienced investors do not argue about whether the 70% rule is right in the abstract. They tune it to the deal they are looking at.
In higher-friction markets or on heavier rehabs, they may underwrite to 65% or lower. On tight cosmetic jobs with cheaper financing and fast market absorption, they may allow a slightly higher threshold.
The important point is that the percentage should come from the real cost structure and risk profile of the deal, not from a desire to make the acquisition price feel more comfortable.
- Use a tighter rule when rehab risk or market friction is high.
- Use the live calculator when the deal survives the first-pass filter.
- Treat the rule as a screening tool, not a permission slip.