Analyze fix-and-flip profits, buy-and-hold returns, or estimate after-repair value (ARV).
A widespread belief is that the 70% rule lets you offer 70% of what a flipped house will sell for. The actual rule is 70% of the after-repair value minus the repair bill, a much lower number. The ARV tab here shows 70% of the blended ARV and stops there, so you subtract your rehab estimate yourself, while the Fix and Flip tab tests a real deal against purchase, closing and holding costs.
Defaults on the Fix and Flip tab: buy at $200,000, spend $30,000 on rehab, sell at an ARV of $280,000, hold six months at $1,200 a month, with 3% closing costs on the purchase and 6% on the sale. Total investment is $200,000 + $6,000 buying costs + $30,000 rehab + $7,200 holding = $243,200. The sale nets $280,000 × 0.94 = $263,200, so profit is $20,000 and ROI is 8.22% on the money in the deal.
The formulas behind that: total investment = purchase × (1 + buy closing %) + rehab + monthly hold cost × months; net proceeds = ARV × (1 − sell closing %); profit = net proceeds − total investment; ROI = profit ÷ total investment. The tab also prints (purchase + rehab) ÷ ARV, here 82.1%. It assumes an all-cash deal, so loan interest appears only if you include it in the monthly hold cost.
A 70% rule check on the same deal: 0.70 × $280,000 − $30,000 = $166,000 is the most a strict follower would offer, against the $200,000 used above. That gap is why the profit is thin.
ARV tab: it averages your three comparables ($270,000, $285,000 and $275,000 give $276,666.67), multiplies square footage by price per square foot (1,500 × $150 = $225,000), and takes the simple midpoint of the two, $250,833.33. The Max Offer line is 0.70 × that, $175,583.33, before repairs. Subtract the $30,000 rehab and you reach $145,583.33.
Buy and Hold tab: the loan is always a 30-year fixed, NOI = rent × (1 − expense ratio) × 12, cap rate = NOI ÷ price, and cash flow = rent × (1 − expense ratio) − mortgage payment. With a $300,000 price, 20% down at 7%, $2,000 rent and a 40% expense ratio, NOI is $14,400 (a 4.8% cap rate) and monthly cash flow is −$396.73.
Because the page multiplies ARV by 0.70 without taking out repairs. Subtract your rehab budget from that figure to get the number the rule actually calls for.
Everything you pay each month while owning but not living in or renting the property: property tax, insurance, utilities, and any loan interest or insurance if you borrow. There is no separate financing field, so an interest-only hard-money loan has to be folded in here.
By a third of the gap in the comps average, and by half of that in the blended ARV. Raise one comp by $30,000 and the average moves $10,000 while the blended ARV moves $5,000. Use sold homes of similar size and condition, not listings.
It is a commonly used rough figure that bundles taxes, insurance, maintenance, vacancy and management, but not the mortgage. Build your own by adding quoted monthly costs and dividing by rent.
Very. A $265,000 sale instead of $280,000 (5.4% lower) cuts profit from $20,000 to $5,900, because only the 6% selling cost scales down with price while every other cost stays put.