The 70 Percent Rule in Real Estate: What It Is and How It Works in South Florida

The 70 percent rule is the foundation every house flipper builds on. It is a simple formula that gives you the maximum price to pay for a property, and it is designed to keep you profitable even when things go sideways. If you are flipping in Palm Beach, Broward, or Miami-Dade, you need to understand this rule before you make your first offer.

What is the 70 percent rule in real estate?

The 70 percent rule says you should pay no more than 70% of a property's After Repair Value (ARV), minus your estimated repair costs. The formula:

• Maximum Purchase Price = (ARV x 0.70) - Repair Costs

That 30% margin is not pure profit. It covers your profit target, selling costs (typically 6 to 8%), holding costs (financing, taxes, insurance, utilities), and unexpected overruns. Think of it as a safety buffer baked into every deal from the start.

70 percent rule example in South Florida

Here is a real-world scenario in Fort Lauderdale. You find a 3/2 that needs a full kitchen and bath update. Renovated comps in the same neighborhood are selling at $480,000. That is your ARV. Your contractor estimates $75,000 in repairs.

• ARV: $480,000
• 70% of ARV: $336,000
• Minus repairs: $75,000
• Maximum offer: $261,000

If the seller wants $295,000, the deal does not work. You either negotiate down, tighten your rehab scope, or walk away. The 70 percent rule made that call in 30 seconds, before you invested a full day in due diligence.

Why the 70 percent rule exists

The rule accounts for real costs that beginners consistently underestimate:

• Agent commissions, closing costs, and staging typically run 8 to 10% of ARV
• Hard money interest, property taxes, insurance, and utilities add up to $3,000 to $6,000 per month in South Florida
• Almost every rehab project runs over budget. The 70% buffer absorbs that
• After all of the above, a well-executed flip should net 10 to 15% of ARV

When experienced flippers adjust the rule

The 70 percent rule is a starting point, not a law. Experienced South Florida flippers sometimes use an 80% rule in specific situations:

• The rehab is purely cosmetic (paint, flooring, fixtures) with minimal unknowns
• The market is rising fast and the ARV at resale will likely exceed today's comps
• They are buying cash with no financing costs, which eliminates 3 to 5% of typical holding costs
• The property is in a high-velocity submarket like Coconut Grove or Coral Gables where days on market are extremely short

The honest truth: most flippers who stretch past 70% on early deals regret it. Surprises happen. Stick to the rule until you have 10 or more flips of experience in your specific market.

70 percent rule vs. 70 rule calculator: what is the difference?

They are the same concept. "70 percent rule" and "70 rule" both refer to the ARV x 0.70 minus repairs formula. A 70 rule calculator is a digital tool that runs the math instantly across different ARV and repair scenarios. Use our Fix & Flip / BRRRR Calculator to model full deal returns beyond just the acquisition price.

Ready to find South Florida flips that actually pass the 70 percent rule? Tell us your buy box and we will source off-market deals that work. For market data to help you nail your ARV, see Florida Realtors market statistics.

Frequently asked questions

Is the 70 percent rule the same as the 70-30 rule?

Yes. When people say the 70-30 rule in real estate, they mean the same formula: pay no more than 70% of ARV minus repair costs, leaving a 30% margin for expenses and profit.

What if the repair costs are unknown?

Get a contractor to walk the property before you offer. If that is not possible, use a conservative estimate: $30 to $50 per square foot for a moderate rehab, $60 to $80 for a gut renovation. Err on the high side. The 70 percent rule punishes optimistic repair estimates.

Does the 70 percent rule apply to BRRRR deals?

It is a useful starting filter, but BRRRR has a different exit. Instead of selling, you refinance. Your real target is making sure the after-repair value supports a cash-out refi that returns most of your capital. Run the full numbers in a dedicated BRRRR calculator rather than relying on the 70% rule alone.

What counts as ARV?

ARV is what the property will sell for after repairs are complete, based on recent comparable sales of similar renovated homes within half a mile and sold in the last 90 days. Use a licensed appraiser or a realtor with solid local comp access. Guessing ARV is how flippers lose money.