Investing · Textbook rules
Flip math, the textbook way
Purchase, rehab, ARV, months and selling costs in; the 70% rule's max offer, projected profit and ROI out. Copy the link to send someone the deal.
Example inputs. The holding cost and the 8% selling cost are example assumptions — J.D. sets these.
The textbook verdict
Passes the 70% rule: $165,000 is $5,000 under the $170,000 max offer.
- 70% rule max offer
- $170,000
- Projected profit
- $68,600
- ROI
- 33.1%
- After-repair value
- $300,000
- Purchase
- −$165,000
- Rehab
- −$40,000
- Holding (4 months × $600)
- −$2,400
- Selling costs (8%)
- −$24,000
- Projected profit
- $68,600
- Cash in (purchase + rehab + holding)
- $207,400
How we figured this
- 70% rule max offer (MAO) = ARV × 70% − rehab.
- Holding = months × holding cost per month.
- Selling costs = ARV × selling-cost %.
- Projected profit = ARV − purchase − rehab − holding − selling costs.
- ROI = projected profit ÷ cash in, where cash in = purchase + rehab + holding (all cash, no loan).
The verdict compares your purchase price to the MAO. It's a rule of thumb, not a valuation.
Example assumptions — J.D. sets these. Holding $600 a month and selling costs at 8% of ARV, starting figures for you to change. The 70% rule is the textbook's, not his.
Textbook rules only. This is the 70% rule and the plain profit arithmetic every investing book teaches — not the underwriting J.D. uses on his own offers.
We'll carry it to the form so you don't type it twice. It stays in this browser tab, never in the link, and nothing is sent until you submit that form.
Read this before you offer
What the textbook leaves out
- Loan costs. Points, interest and lender fees aren't here; this is all-cash math, so ROI is profit ÷ cash in.
- Your buying costs. Your side of title and escrow when you buy comes on top of the purchase price.
- The market. The 70% rule doesn't know whether houses in that ZIP sell in 9 days or 90.
- The surprise in the walls. Budget a contingency on the rehab — Blackland clay has opinions about foundations.