Start with the after-repair value (ARV), subtract repairs, holding and selling costs, and your profit. The 70 percent rule is a quick screen, not a guarantee. The real work is a believable ARV, an honest rehab budget, and a timeline you can hit.
Most flips that lose money did not fail on construction. They failed on the numbers before the purchase. Here is how I run a deal, from the quick screen to the real math.
Step 1: Get a believable ARV
ARV is what the house will sell for after repairs. Do not guess.
Use sold comps from the last few months, close by, similar size, age, and condition.
Adjust for the things buyers pay for: pool, garage, lot, updates, and school or neighborhood lines.
Be careful with active listings. They are asking prices, not sale prices.
In Orlando, a few streets can price very differently. Stay tight.
Step 2: The 70 percent rule
A quick screen many investors use:
Max offer = (ARV x 70%) minus repairs
Example, illustrative only: ARV $400,000. 70% is $280,000. Repairs $50,000. Max offer about $230,000.
It is a rule of thumb, not a law. In hot markets investors stretch it. In slow markets or on bigger rehabs, you may need to go lower.
Step 3: Build the real budget
Purchase price: What you pay
Closing costs (buy): Title, recording, doc stamps as applicable
Rehab: Contractor bids plus a contingency
Permits: Don’t skip them
Holding costs: Loan interest, taxes, insurance, utilities, HOA
Selling costs: Commissions, closing costs, concessions
Profit: Your target, set in advance
Step 4: Add a contingency
Add a cushion on the rehab. Old plumbing, roof, electrical, and surprises behind walls are normal. Do not spend your profit on surprises.
Step 5: Check the timeline
Every extra month costs money. Be honest about permits, inspections, and contractor availability. A deal that works at four months can fail at eight.
Red flags that kill flips
Unpermitted work that has to be opened up
Roof, electrical, or foundation problems
Overbuilt for the neighborhood
HOA or deed restrictions that limit what you can do
An ARV based on one great comp
Next step
Take a house you are watching. Pull five sold comps, build the budget above, and see what offer the numbers allow. If your number is far below the asking price, that is your answer.
How I can help you do this
See the proof first: review my full track record and the before and after projects. Then join the investor list if you want to work together.
I have done 200+ flips and sold 500+ homes over 23+ years in Orlando, so I know the ARV and the rehab cost on the street you are looking at, not just the formula. When you send me a deal I help you:
Pull and adjust the sold comps so your ARV holds up.
Walk the house and size the rehab, including the permits and the surprises.
Set your max offer and your timeline.
Plan the exit and the sale. I list and sell homes for a living.
Send me the address and I will tell you what I would pay.
This is education, not financial or tax advice. Your numbers will vary by deal and market.