Fix n Flip 70% rule

Fort Lauderdale, Florida
Rehabbing & House Flipping
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Fix n Flip 70% rule

Shayan Sameer
Member since 2024 · 63 posts · 38 votes

Hello Everyone,

I have a few questions for all the fix/flip investors.  I did 2 fix flips last year.  One, I made a profit; other one, I kinda even out.  I learned a lot from both projects and hope to learn more.  I wanted to know what are your thoughts on the 70% rule.  Do you guys still apply that rule?  For all the deals here in South Florida, I'm not able to do 70%, and it seems like the profit margin is really small.  What dollar amount or percentage do you guys usually look for in fix/flip properties? 

My 70 % rule...

ARVx70% - rehab cost = purchase price.  

2nd question.... I know with a hard money lender, you lost good amount of profit.  Do you guys use hard money lender for a rehab or use your own cash?  

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Shayan Sameer:

Hello Everyone,

I have a few questions for all the fix/flip investors.  I did 2 fix flips last year.  One, I made a profit; other one, I kinda even out.  I learned a lot from both projects and hope to learn more.  I wanted to know what are your thoughts on the 70% rule.  Do you guys still apply that rule?  For all the deals here in South Florida, I'm not able to do 70%, and it seems like the profit margin is really small.  What dollar amount or percentage do you guys usually look for in fix/flip properties? 

My 70 % rule...

ARVx70% - rehab cost = purchase price.  

2nd question.... I know with a hard money lender, you lost good amount of profit.  Do you guys use hard money lender for a rehab or use your own cash?  


 70% rule is very different on a $100,000 property vs a $1,000,000 property. I never go off of a flat percentage on anything, I analyze the costs to get to a specific return I target and analyze the risk that is involved. 70% may be an initial metric to see if it is even worth pursuing, but every deal should be evaluated independently based on costs, time and risk involved. As you mention, if you are using hard money yes you are paying more in interest and if you hvae the cash I would recommend using cash over hard money due to the high interest rate that you are paying.

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  • Bryan HartlenPro Member
    Investor · Phoenix, AZ · Member since 2018 · 313 posts · 157 votes
    1y

    @Shayan Sameer, we use the 70% rule to decide if we’re going to spend the time to fully underwrite the property. If it’s at or near 70% we dig into the full cost model that accounts for financing costs (hard money and GAP), acquisition costs, holding costs and selling costs. For lower value flips, 200 - 300k, we stick to that range as the projected profits doesn’t have much room for an inevitable rehab oh-$hit. On higher value we are willing to stretch if need be as there’s more room to cover unknown issues.

    4Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Shayan Sameer:

    Hello Everyone,

    I have a few questions for all the fix/flip investors.  I did 2 fix flips last year.  One, I made a profit; other one, I kinda even out.  I learned a lot from both projects and hope to learn more.  I wanted to know what are your thoughts on the 70% rule.  Do you guys still apply that rule?  For all the deals here in South Florida, I'm not able to do 70%, and it seems like the profit margin is really small.  What dollar amount or percentage do you guys usually look for in fix/flip properties? 

    My 70 % rule...

    ARVx70% - rehab cost = purchase price.  

    2nd question.... I know with a hard money lender, you lost good amount of profit.  Do you guys use hard money lender for a rehab or use your own cash?  


     70% rule is very different on a $100,000 property vs a $1,000,000 property. I never go off of a flat percentage on anything, I analyze the costs to get to a specific return I target and analyze the risk that is involved. 70% may be an initial metric to see if it is even worth pursuing, but every deal should be evaluated independently based on costs, time and risk involved. As you mention, if you are using hard money yes you are paying more in interest and if you hvae the cash I would recommend using cash over hard money due to the high interest rate that you are paying.

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  • Annie Seurer
    Investor · West Palm Beach, FL · Member since 2024 · 90 posts · 47 votes
    1y
    Quote from @Shayan Sameer:

    Hello Everyone,

    I have a few questions for all the fix/flip investors.  I did 2 fix flips last year.  One, I made a profit; other one, I kinda even out.  I learned a lot from both projects and hope to learn more.  I wanted to know what are your thoughts on the 70% rule.  Do you guys still apply that rule?  For all the deals here in South Florida, I'm not able to do 70%, and it seems like the profit margin is really small.  What dollar amount or percentage do you guys usually look for in fix/flip properties? 

    My 70 % rule...

    ARVx70% - rehab cost = purchase price.  

    2nd question.... I know with a hard money lender, you lost good amount of profit.  Do you guys use hard money lender for a rehab or use your own cash?  


    Hey Shayan, I'm in South Florida myself and work with quite a few investors in the area. Are you flipping in Ft. Lauderdale? Have you looked at the Treasure Coast? How are you sourcing deals - off or on market? 


    0Reply
  • Shayan Sameer
    OP
    Member since 2024 · 63 posts · 38 votes
    1y

    Hi Annie,

    Not just the Ft. Lauderdale area, but all three tri-counties. I'm sorry, but I'm not too familiar with the Treasure Coast.  Let's chat when you have a few minutes.

    0Reply
  • Annie Seurer
    Investor · West Palm Beach, FL · Member since 2024 · 90 posts · 47 votes
    1y
    Quote from @Shayan Sameer:

    Hi Annie,

    Not just the Ft. Lauderdale area, but all three tri-counties. I'm sorry, but I'm not too familiar with the Treasure Coast.  Let's chat when you have a few minutes.

    Sounds good - sent you a message. 
    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    1y
    Quote from @Shayan Sameer:

    Hello Everyone,

    I have a few questions for all the fix/flip investors.  I did 2 fix flips last year.  One, I made a profit; other one, I kinda even out.  I learned a lot from both projects and hope to learn more.  I wanted to know what are your thoughts on the 70% rule.  Do you guys still apply that rule?  For all the deals here in South Florida, I'm not able to do 70%, and it seems like the profit margin is really small.  What dollar amount or percentage do you guys usually look for in fix/flip properties? 

    My 70 % rule...

    ARVx70% - rehab cost = purchase price.  

    2nd question.... I know with a hard money lender, you lost good amount of profit.  Do you guys use hard money lender for a rehab or use your own cash?  

     If you are all in 70% it should be an ok deal. However, FL is crashing and going to get worse I would ONLY do a deal in FL where I was all in 60% of current values. Be very careful 

    2Reply
  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    1y
    Quote from @Shayan Sameer:

    Hello Everyone,

    I have a few questions for all the fix/flip investors.  I did 2 fix flips last year.  One, I made a profit; other one, I kinda even out.  I learned a lot from both projects and hope to learn more.  I wanted to know what are your thoughts on the 70% rule.  Do you guys still apply that rule?  For all the deals here in South Florida, I'm not able to do 70%, and it seems like the profit margin is really small.  What dollar amount or percentage do you guys usually look for in fix/flip properties? 

    My 70 % rule...

    ARVx70% - rehab cost = purchase price.  

    2nd question.... I know with a hard money lender, you lost good amount of profit.  Do you guys use hard money lender for a rehab or use your own cash?  


     This rule is good for the 30,000 foot view of running numbers on deals so you do not get bogged out with running those numbers on every single deal for example.. Spending too much time on analyzing one deal will put you out of the game on too many other ones... I would say okay, if I look at 100 deals and they fit 70% rule on all of them... Knocks down your list to 30 deals.. then you can dig into those more (better comps, etc.), then after you do all that you will have a list of 5-10 really good ones to make offers... That is how I use the rule 

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  • Shannon MogilinskiPro Member
    Investor · Chicago Suburbs · Member since 2021 · 46 posts · 37 votes
    1y

    Hi Shayan--Totally agree with Chris Seveney...I use multiple metrics for a deal.  My last 10 deals have not met the 70% rule of thumb nor have they been off-market.  Surprise! I have been successful in all of them.  If your numbers are not working...go up;  Meaning, better properties w/higher ARVS in good neighborhoods/schools.  This is not the lowest-end property you can find in these areas either.  I have an example under my BPP profile of one we did a few months ago.  Level up and run some numbers--maybe a different market will reveal itself. Hope this helps!!

    1Reply
  • Shayan Sameer
    OP
    Member since 2024 · 63 posts · 38 votes
    1y

    Thanks, everyone, for all your feedback... 

    I saw another property in the West Palm Area.  The property seems to be in good shape and will requirecosmetic rehab.  

    5/3 house 2600 SQFT

    We will need a new AC, Kitchen upgrade, bathroom upgrade, flooring, painting, andcarpet upstairs.  

    ARV 690K

    Selling Price 500k

    Rehab 85k

    After closing costs, points, hard money, lender fees... My profit seems to be $20-25k.  That's only if everything goes well.  

    If I'm spending 500k... my profit should be higher?  Thoughts?  Seems like a too much work for 20-25k.  

    0Reply
  • Freddy AlbanBusiness Member
    Real Estate Broker · Charlotte, NC · Member since 2020 · 74 posts · 33 votes
    1y

    Hey, great questions! The 70% rule is solid, but in markets like South Florida, it’s tough to hit that target—especially with rising property values.

    I think it’s more about being flexible with your numbers. Sometimes, I aim for closer to 75-80% if the deal has solid upside or lower rehab risk. As for funding, hard money can cut into profits, but it’s useful for scaling quickly.

    If the numbers still work after interest and fees, it’s worth considering. Using cash is great if you want to keep all the profits, but it can limit your deal flow. 

    Hope that helps!

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  • Julia Lyrberg
    Lender · TX · Member since 2024 · 308 posts · 196 votes
    1y

    The 70% rule is great, but in markets like South Florida, it can be hard to stick to. Some investors focus on a target profit instead of strict percentages.

    As for hard money, it does reduce profit, but it allows you to scale faster and keep your cash for other deals. It really depends on your goals and whether you prefer to use your own cash or leverage financing to grow.

    I'd be happy to run some numbers for you!

    1Reply
  • Shannon MogilinskiPro Member
    Investor · Chicago Suburbs · Member since 2021 · 46 posts · 37 votes
    1y

    Looking at all the posts I think it is so interesting that many of us are not really using the 70% rule.  I don't think anyone has said 'oh yes we don't make a move without it'.  Lends creadance to the idea maybe in today's markets, it's dead.  For sure it is a huge safetly net if you can get it, but strictly applied, seems many of us would be out of business.

    0Reply
  • Bryan HartlenPro Member
    Investor · Phoenix, AZ · Member since 2018 · 313 posts · 157 votes
    1y
    Quote from @Shayan Sameer:

    Thanks, everyone, for all your feedback... 

    I saw another property in the West Palm Area.  The property seems to be in good shape and will requirecosmetic rehab.  

    5/3 house 2600 SQFT

    We will need a new AC, Kitchen upgrade, bathroom upgrade, flooring, painting, andcarpet upstairs.  

    ARV 690K

    Selling Price 500k

    Rehab 85k

    After closing costs, points, hard money, lender fees... My profit seems to be $20-25k.  That's only if everything goes well.  

    If I'm spending 500k... my profit should be higher?  Thoughts?  Seems like a too much work for 20-25k.  

    Personally, we would not do that deal.  Return is too low.  Risk is too high - $85k rehab is more than lipstick.  High probability that you’ll uncover an oh-$**** issue that will reduce or eliminate your projected profit. 

    0Reply
  • Shannon MogilinskiPro Member
    Investor · Chicago Suburbs · Member since 2021 · 46 posts · 37 votes
    1y
    Quote from @Shayan Sameer:

    Thanks, everyone, for all your feedback... 

    I saw another property in the West Palm Area.  The property seems to be in good shape and will requirecosmetic rehab.  

    5/3 house 2600 SQFT

    We will need a new AC, Kitchen upgrade, bathroom upgrade, flooring, painting, andcarpet upstairs.  

    ARV 690K

    Selling Price 500k

    Rehab 85k

    After closing costs, points, hard money, lender fees... My profit seems to be $20-25k.  That's only if everything goes well.  

    If I'm spending 500k... my profit should be higher?  Thoughts?  Seems like a too much work for 20-25k.  

    Shayan, how long are you going to plan on holding it?  And is that ARV top of the market for resell or conservative?  If you want a chat I can tell you what I would consider if that is helpful.  It's tight but I'm trying to process the room you may have there....I believe we are connected so let me know!
    0Reply
  • Shayan Sameer
    OP
    Member since 2024 · 63 posts · 38 votes
    1y

    Sure.  Let me know what works for you. Would love to chat and discuss in detail. 

    0Reply
  • Account Closed
    Realtor · Hartford, CT · Member since 2023 · 19 posts · 7 votes
    1y

    I too find myself losing out on a lot of opportunities due to the fact of using hard money. If you have the cash, that's always the best. But there's advantages for either way depending on your situation, plan, and goals.

    The 70% rule is just a guideline. Every deal is different, and every person is looking for different margins

    After Repair Value (ARV) - Rehab Costs - Purchase Price - Fees (holding costs, closing costs, selling fees) = Net Profit (before taxes).

    Are you ok with the net profit based on how long it's gonna take from start to closing? 

    Its also gonna depend on how much work you have to do. If you have a project that you're doing all the flip work and you are projecting $5k a month, is that really worth it to you? Or are you making $5k a month just to manage contractors? That's a big difference

    I know flippers that will only take a deal with $100k spread, and others that are ok with $30k-$50k.

    0Reply
  • Malcomb StapelPro Member
    Investor · Topeka, KS · Member since 2020 · 669 posts · 488 votes
    1y
    Quote from @Shayan Sameer:

    Thanks, everyone, for all your feedback... 

    I saw another property in the West Palm Area.  The property seems to be in good shape and will requirecosmetic rehab.  

    5/3 house 2600 SQFT

    We will need a new AC, Kitchen upgrade, bathroom upgrade, flooring, painting, andcarpet upstairs.  

    ARV 690K

    Selling Price 500k

    Rehab 85k

    After closing costs, points, hard money, lender fees... My profit seems to be $20-25k.  That's only if everything goes well.  

    If I'm spending 500k... my profit should be higher?  Thoughts?  Seems like a too much work for 20-25k.  


     That deal is way too tight. Your going to have a lot of money on the line to get maybe $25k back, if nothing goes wrong. One or two little mistakes in your underwriting, a miss on the walkthrough, and you will blow right through your profit and come out in negative. 

    0Reply
  • Michael Quarles
    Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
    1y

    The 70% rule is reserved for talking points by the guy on stage talking to an audience who they’re trying to sell a coaching program to   It’s a get excited number not a do a deal number   

    The equation is: maximum of 65% of AS IS value.  Stay with properties at or below median value within 1/2 mile maximum of the subject property.  

    Then determine your burn rate, days between call to cash, take down ability and average profit per opportunity. 

    Those numbers tell you a ton. 

    Good luck. 

    2Reply
  • John Ma
    Investor · Arlington, VA · Member since 2014 · 151 posts · 37 votes
    1y

    70% ARV is a killer deal in our market. Generally most fix flippers are buying at 80%-82% in our market. Margins are often squeezed. Many people are only making $50k or so on $800k-$1M properties.

    These %percentages are market dependant. 

    1Reply
  • Michael Quarles
    Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
    1y
    Quote from @John Ma:

    70% ARV is a killer deal in our market. Generally most fix flippers are buying at 80%-82% in our market. Margins are often squeezed. Many people are only making $50k or so on $800k-$1M properties.

    These %percentages are market dependant. 


     How many deals have you actually done?

    How do you actually know the purchase price others are paying and their margin?   

    Are there margins gross or post net? 

    1Reply
  • John Ma
    Investor · Arlington, VA · Member since 2014 · 151 posts · 37 votes
    1y
    Quote from @Michael Quarles:
    Quote from @John Ma:

    70% ARV is a killer deal in our market. Generally most fix flippers are buying at 80%-82% in our market. Margins are often squeezed. Many people are only making $50k or so on $800k-$1M properties.

    These %percentages are market dependant. 


     How many deals have you actually done?

    How do you actually know the purchase price others are paying and their margin?   

    Are there margins gross or post net? 


    My partner has done HML for a large population in our market. Lenders see all, including how little margin some flippers are operating on.

    0Reply
  • Jonathan Chan
    Lender · Clermont, FL · Member since 2020 · 168 posts · 87 votes
    1y
    Quote from @Bryan Hartlen:

    @Shayan Sameer, we use the 70% rule to decide if we’re going to spend the time to fully underwrite the property. If it’s at or near 70% we dig into the full cost model that accounts for financing costs (hard money and GAP), acquisition costs, holding costs and selling costs. For lower value flips, 200 - 300k, we stick to that range as the projected profits doesn’t have much room for an inevitable rehab oh-$hit. On higher value we are willing to stretch if need be as there’s more room to cover unknown issues.


     What kind of rates are you getting on gap?

    0Reply
  • Kevin Marshburn
    Real Estate Agent · Miami, FL · Member since 2019 · 25 posts · 19 votes
    1y

    Shayan, your West Palm deal is too tight. You're spending over $600k (purchase price + rehab + fees) to make $25k, and then you'll have short term capital gains on that... Better off buying short term treasuries with as close to zero risk as exists in investing. I think 10% total return is a good baseline (although can be dependent on the deal and price point). In other words, if you spend $600k, getting a $60k return would be your benchmark. 

    0Reply
  • Bryan HartlenPro Member
    Investor · Phoenix, AZ · Member since 2018 · 313 posts · 157 votes
    1y
    We use private investors and offer them 20% APR, with 10% return guaranteed, paid as a balloon.
    0Reply
  • Doug Lovett
    Investor · Tampa, FL · Member since 2015 · 63 posts · 59 votes
    1y

    The 70% rule works for properties with an ARV of about $200k up to $400-maybe $500k. On houses below $200k, the 70% rule gives you too low of a profit - you need to lower it the lower you go (ie a $100k ARV would probably be a 60% rule). For higher priced properties the 70% rule gives you too high of a profit and your offer won't be competitive.

    0Reply
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