What does the 70% rule mean in real estate investing?

An investor should pay no more than 70% of ARV minus estimated repair costs. This cushion is intended to cover acquisition costs, holding costs, and profit.

How do I find reliable comparable sales (comps) to estimate ARV?

Use recently closed sales (within 90 days if possible) of similar-sized homes in the same neighborhood. Adjust for differences in beds, baths, and condition. An appraiser or local agent can pull MLS comps.

Can I use ARV to qualify for a rehab loan?

Yes. Hard money lenders and FHA 203(k) loans often lend based on ARV rather than current value. Lenders typically cap loans at 65-70% of ARV.

After Repair Value (ARV) Calculator

Calculate the estimated market value of a property after renovations and determine your maximum allowable offer using the 70% rule.

By AbraCalc Editorial Team · Reviewed by AbraCalc Methodology Review · Last reviewed: 2026-06-25

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How to use this tool

Enter current property value (as-is), estimated repair / renovation cost, estimated value added by repairs and maximum offer rule (%) in the fields above.
Results update instantly as you type — or click Calculate.
Read your after repair value (arv) and the full breakdown beneath it.

⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.

Formula

ARV = Current Property Value + Value Added by Repairs

Maximum Allowable Offer (MAO) = ARV × (Rule% / 100) − Repair Costs

Potential Profit = ARV − Repair Costs − MAO

How it works

The After Repair Value (ARV) estimates what a property will be worth on the open market once all planned renovations are complete. It is calculated by adding the current as-is value to the net value added by the repairs.

The 70% rule is a common guideline used by real estate investors: the Maximum Allowable Offer (MAO) should not exceed 70% of the ARV minus the total repair costs, leaving a buffer for holding costs, closing costs, and profit margin. The default 70% threshold can be adjusted to reflect local market conditions or individual risk tolerance.

Worked example

Fix-and-Flip Property

Current as-is value: $120,000. Estimated value added by repairs: $50,000.
ARV = $120,000 + $50,000 = $170,000.
Repair cost is $30,000. Applying the 70% rule: MAO = $170,000 × 0.70 − $30,000 = $119,000 − $30,000 = $89,000.
Potential profit = ARV − Repair Costs − MAO = $170,000 − $30,000 − $89,000 = $51,000.

ARV is $170,000; the maximum you should offer is $89,000, leaving a potential profit of $51,000.

Common mistakes to avoid

Estimating ARV from asking prices rather than closed comparable sales, overstating the post-repair value.
Applying the 70% rule rigidly without adjusting for local market conditions or holding costs — in high-appreciation markets investors often pay 75-80% of ARV.
Underestimating repair costs, which shrinks the true profit margin even when the ARV estimate is accurate.

Key terms

After Repair Value (ARV): The estimated market value of a property after all planned repairs and renovations have been completed.
Maximum Allowable Offer (MAO): The highest price an investor should pay for a property, calculated using the ARV and the investor's target profit margin.
70% Rule: A real estate investment guideline stating that an investor should pay no more than 70% of a property's ARV minus repair costs.
Value Added: The increase in market value that results from renovations, distinct from the cost of those renovations.
Fix-and-Flip: A real estate investment strategy in which an investor purchases a distressed property, renovates it, and sells it for a profit.

Frequently asked questions

What does the 70% rule mean in real estate investing?: An investor should pay no more than 70% of ARV minus estimated repair costs. This cushion is intended to cover acquisition costs, holding costs, and profit.
How do I find reliable comparable sales (comps) to estimate ARV?: Use recently closed sales (within 90 days if possible) of similar-sized homes in the same neighborhood. Adjust for differences in beds, baths, and condition. An appraiser or local agent can pull MLS comps.
Can I use ARV to qualify for a rehab loan?: Yes. Hard money lenders and FHA 203(k) loans often lend based on ARV rather than current value. Lenders typically cap loans at 65-70% of ARV.