70% Rule Calculator

70% Rule Calculator is a real estate investing tool to calculate the maximum price you should pay for a house based on the after repair value and renovation costs.

70% Rule Formula

The formula for the 70% rule is given below MAO = 0.75 x A - R, where MAO = Maximum Allowable Offer A = After Repair Value R = Renovation Costs

How to calculate the 70% rule?

Let's say that you've found a house that has a market price of $150,000, and you estimate the renovation costs to be about $80,000 and after the repair value to be $200,000. According to the 70% rule, should buy the house at this market price? Using the 70% rule formula above, and we have MAO = 0.7 x $300,000 - $80,000 MAO = $210,000 - $80,000 MAO = $130,000 According to the 70% rule, we should not pay more than the maximum allowable offer of $130,000 for this house. Therefore, we should not buy this house at the market price of $150,000. We should either try to negotiate the price down to $130,000 or lower, or move on to the next house.