Understanding the 70% Rule in Wholesaling

The 70% rule is one of the most widely used tools in real estate investing. It’s a simple formula that helps you quickly determine the maximum price you should pay for a property.

By using it correctly, you can protect your profits and avoid overpaying.

The Formula

The formula is straightforward: Maximum Offer = (ARV × 70%) − Repair Costs.

ARV stands for After Repair Value—the price the property will sell for once it’s fully renovated. Subtracting repairs ensures you leave enough room for holding costs, financing, selling fees, and your profit.

Why It Matters

That 30% discount isn’t just profit. It also covers hidden costs like taxes, utilities, closing fees, and unexpected surprises that almost always pop up during a project.

By sticking to the rule, you give yourself a margin of safety while still making the deal attractive.

Example

Imagine a property with an ARV of $200,000 and repair costs of $30,000.

Using the formula, your maximum allowable offer would be $110,000.

If you can buy at that price or lower, you’re likely in a good position to profit.

When to Adjust

The 70% rule is a guideline, not a law. In competitive markets, investors sometimes stretch to 75–80% to win deals.

In riskier situations—such as properties with heavy rehab needs or slower markets—you might tighten to 60–65% for more protection.

The key is to know your market and adjust accordingly.

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Bottom Line: The 70% rule is a quick way to filter potential deals, but it should never replace full due diligence. Always verify comps, get real repair bids, and understand your financing before you make an offer.

PropPipeline’s ValueSync tools can help automate this math so you can focus on finding the right deals.