The 70% rule, in two inputs

A screening shortcut used by flippers and wholesalers: never pay more than 70% of a property’s after-repair value, minus the cost of the repairs. The 30% held back is meant to absorb buying, holding, and selling costs and still leave a profit. It exists to reject deals in seconds, not to replace a full deal analysis.

Convention, tuned by experience — not a law of markets. In practice investors adjust it: competitive, expensive markets often see buyers working at 75–80% because nothing trades at 70%, while very cheap properties often need a lower percentage because fixed costs are a bigger share of a small ARV. Treat 70% as the starting point and adjust for your market and costs.

Rentals you plan to hold (their value is cash flow, so cap rate and cash-on-cash are the right lenses), low-priced properties where 30% of ARV cannot cover fixed costs, and unusual deals — heavy structural work, long timelines, or creative financing — where the rule’s bundled 30% badly misestimates the real costs. In all of those, run the actual numbers.

No — it is a ceiling, not a target. The rule tells you the most you can pay and still plausibly protect your margin. What you actually offer depends on comps, competition, condition, and negotiation. Plenty of good offers come in well under the rule’s maximum.