ARV Calculator
Apply the 70% rule to a flip: enter the after-repair value, your repair budget and the asking price to find your maximum allowable offer.
What this calculator does
This ARV calculator applies the flipper's basic screening test. Enter the after-repair value you have established from comparable sales, your estimated repair cost, and the price being asked, and it returns the maximum allowable offer under the seventy percent rule along with the estimated profit at the asking price.
The maximum allowable offer is seventy percent of ARV minus repairs. That thirty percent margin is not profit — it is profit plus everything the arithmetic does not name: agent commission on resale, closing costs at both ends, loan points and interest, taxes, insurance, and utilities across the hold. The calculator also flags whether the asking price clears the threshold, which is the quick yes-or-no you need when deals move fast.
When to use it
Use it the moment a property comes across your desk, before you commit time to a walkthrough. On a wholesaler's list of twenty properties, the seventy percent test eliminates most in about a minute each, which is exactly what a screening rule should do.
It is also useful in reverse when you have a fixed acquisition price and want to know what renovation budget the deal supports. Enter the ARV and the price, and the maximum offer figure tells you how far your repair budget can stretch before the margin disappears. And it is the discipline check on your own optimism: if you find yourself arguing that seventy-five percent is fine because the neighborhood is improving, that argument is exactly the one that produces break-even flips.
Understanding the inputs
After repair value is the single input that determines whether the answer is useful. It must come from sold comparables within the last six months, ideally within half a mile, matching the finished condition, size, and layout you intend to deliver. Never use active listings and never use an automated valuation estimate.
Repair cost should come from a contractor walkthrough, not a per-square-foot rule of thumb, with fifteen to twenty percent added for what you cannot see. Purchase price is the asking price or your intended offer. The seventy percent multiplier is fixed in this calculator, so if you work at a different ratio, compare the estimated profit figure against your own required margin instead.
How is this calculated?
Profit = ARV − Purchase Price − Renovation Cost. The 70% rule: Max Offer = ARV × 0.70 − Renovation Cost.
A worked example
Suppose comparable renovated houses on the street sold for $320,000, your contractor puts the rehab at $55,000, and the property is listed at $150,000. Maximum allowable offer is seventy percent of $320,000, or $224,000, less $55,000 of repairs — so $169,000. At $150,000 the asking price clears the threshold with $19,000 to spare.
Estimated profit at the asking price is $320,000 minus $150,000 minus $55,000, or $115,000 — but that is before the costs the rule was designed to absorb. Take six percent agent commission and two percent closing on the sale, about $25,600, plus roughly $16,400 in points and interest on a six-month hard money loan at twelve percent, plus $4,000 of taxes, insurance, and utilities. Real pre-tax profit lands nearer $69,000, and as ordinary income it will be taxed accordingly.
Limitations and assumptions
The estimated profit figure is gross by design. It excludes selling commission, closing costs at both ends, financing points and interest, holding costs, and tax — which together commonly cut it by a third to a half. Treat the seventy percent rule as the screen and build a full cost sheet before you make a binding offer.
The rule also assumes a normal retail resale in a stable market. It does not account for a market that softens during your six-month hold, a property that sits unsold for ninety days, permit delays, or a repair scope that grows once walls are open. And it says nothing about ARV accuracy, which is where most flip losses originate — a ten percent ARV error on a $320,000 house is $32,000, larger than most contingency budgets.
Common Questions
- What is the 70 percent rule?
- Maximum offer equals seventy percent of after-repair value minus repair costs. The thirty percent gap covers your profit, holding costs, financing, and the agent commission and closing costs on the way out. It is a screening heuristic that assumes a full retail resale — it is not a profit calculation.
- How do I establish ARV accurately?
- Use three to five sold comparables from the past six months, within a mile, of similar square footage, bed and bath count, and condition after renovation. Sold prices only — never active listings, which reflect what sellers hope for. If the comps disagree by more than ten percent, your ARV is a guess and the deal deserves more caution.
- Does the 70 percent rule always apply?
- No. Seventy percent suits mid-priced markets. On high-value homes where fixed costs are a smaller share of price, experienced flippers work at seventy-five or even eighty percent. On low-priced properties under $100,000, fixed costs eat proportionally more and seventy percent can still be too generous.
- What does the estimated profit figure leave out?
- Quite a lot. It is ARV minus purchase price minus repairs, so it excludes agent commission on sale, closing costs on both transactions, loan points and monthly interest, property taxes, insurance, and utilities during the hold. Together those typically consume ten to fifteen percent of ARV.
- How much should I budget for overruns?
- Add fifteen to twenty percent contingency to any renovation estimate, and more on a property older than fifty years where you cannot see behind the walls. Knob-and-tube wiring, cast iron drains, foundation movement, and unpermitted prior work are the four discoveries that most often turn a profitable flip into a break-even one.
- What do holding costs actually run?
- On a six-month flip financed with hard money at twelve percent plus two points, a $205,000 loan costs about $4,100 in points and $12,300 in interest, before property taxes, insurance, and utilities. Every extra month of delay is real money, which is why realistic timelines matter more than optimistic budgets.
- How is a flip taxed?
- As ordinary income, not capital gains, because a flipper is treated as a dealer holding inventory. That means your marginal income tax rate plus self-employment tax of 15.3 percent on the profit. A $115,000 gross profit can lose forty to fifty percent to tax, which changes the deal materially.
- Can I use ARV for a BRRRR instead of a flip?
- Yes, and the rule shifts. Refinance lenders typically lend seventy to seventy-five percent of ARV, so buying at seventy percent of ARV minus repairs means you can often recover most of your capital at refinance. The difference is you skip the six percent selling commission, which materially improves the math.
- Should I trust a wholesaler's ARV?
- Verify it independently, every time. Wholesalers are paid on assignment fees, so an optimistic ARV and a light repair estimate are exactly the errors their incentives produce. Pull your own comps, walk the property with your own contractor, and expect the real numbers to be less attractive than the marketing.
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