House Flipping Profit, ROI & 70% Rule MAO Calculator

Real Estate Investing: Mastering the 70% Rule in Fix & Flips

The 70% Rule is the universal benchmark used by experienced real estate investors and wholesalers to determine the Maximum Allowable Offer (MAO) on a distressed property.

Why the 70% Rule Protects Investors

• The formula) automatically reserves 30% of the property's gross value to cover transaction costs: ~10% for buying/selling commissions, ~5-8% for holding and financing costs, and a 12-15% net profit margin buffer against unexpected contractor overruns.

How to Use This Calculator

Enter your After Repair Value (ARV - Expected Resale Price in ) (e.g. 380000), Target Purchase Price () (e.g. 220000), Estimated Rehab & Renovation Costs () (e.g. 55000), Holding Period / Project Duration (Months) (e.g. 6.0), Monthly Holding Costs ( / month: Tax, Insurance, Utilities, HOA) (e.g. 850), Financing Method — choose from Hard Money Loan (80% LTV, 11% Interest, 2 Points), 100% All-Cash Purchase (No loan interest / points), Private Money / Bank (85% LTV, 8.5% Interest, 1 Point), and Selling Costs (% of ARV - Agent Commissions & Title) (e.g. 7.5 (5-6% Realtor + 1.5-2% Title/Transfer)). Results update instantly as you type — adjust any value to compare scenarios.

The Formula

Fix-and-flip real estate profit, ROI & 70% Rule formulas:70\% Rule MAO = (After Repair Value × 0.70) - Estimated Rehab Budget Project Costs = Purchase Price + Rehab + Buying Costs + (Monthly Holding × t) + Loan Financing + Selling Costs Flip Profit = After Repair Value (ARV) - Total Project Costs ROI (\%) = ((Net Profit) / (Total Capital Invested)) × 100\%-on-Cash Return = ((Net Profit) / (Actual Cash Out-of-Pocket Invested)) × 100\% ROI = Total ROI × ((12) / (Months))

Worked Example

For example, purchasing a distressed house for 220,000 with a 55,000 rehab budget, holding for 6 months at 850/mo holding costs, financing with hard money, and selling for 380,000 ARV with 7.5% selling costs (28,500): Total costs equal . Net Flip Profit is . 70% Rule MAO was 211,000.

Understanding Your Result

ROI = (Net Profit ÷ Investment Cost) ×

• A positive ROI means the investment returned more than it cost; negative ROI means a loss. For capital investment comparisons, use ROI alongside payback period and IRR — a high ROI over 10 years may be less attractive than a moderate ROI over 3 years. Marketing ROI benchmarks: email marketing averages 4,200% ROI (42 per 1 spent); paid search averages 200%; social media organic averages 95%. Internal projects typically require minimum 15–25% ROI to clear a standard hurdle rate.