The Home Stretch: Flipping Calculator, 70% Rule, and Getting to Close

TLDR
You’ve found the deal, made the offer, and got it under contract. Now the math gets specific. The 70% rule is a shortcut. The flipping calculator is the real tool. This section walks through how both work, how to anchor your offers, and what actually happens between contract and close.

Table of Contents

The 70% Rule: Where It Comes From

You’ve probably heard the 70% rule. It’s the standard shortcut for making offers on houses, and it works. But I always like to understand where things come from before I use them.

Here’s the math the 70% rule is approximating:

Take your ARV (after repair value). Subtract all your costs:

  • Acquisition price
  • Rehab budget
  • Points on your loan (origination fees)
  • Interest over the hold period (if you hold for 6 months at 12% annual, that’s 6%)
  • Closing costs going in and coming out
  • Holding costs: utilities, insurance, property taxes during the flip
  • Your profit target

All of that, added up, should equal the ARV minus the cost to sell (realtor commissions, title costs, etc.).

The 70% rule collapses all of that into one quick formula:

ARV × 70% - Rehab Cost = Max Purchase Price

On a $300,000 ARV house with $50,000 in rehab: $300,000 × 0.70 = $210,000. Minus $50,000 = $160,000. That’s what I should pay.

Does it work? Yeah, basically. In the sales example I walked through earlier, we had a $300,000 ARV house with a higher rehab budget, and the flipping calculator came out around $159,000. Right on.

But I don’t just use the 70% rule. Here’s why.

The Flipping Calculator

The 70% rule doesn’t tell you your actual profit in dollars. It doesn’t tell you how much cash you need to bring to the table. It doesn’t give you an annualized return so you can compare it against other uses of your money.

The flipping calculator does all of that.

It takes your inputs: ARV, rehab cost, loan points, interest rate, hold time, closing costs, and your target profit percentage. It spits out:

  • The acquisition price you should offer
  • How much cash you actually need (whether you’re bringing it or borrowing it)
  • Profit in dollars
  • Annualized return

That annualized return number matters more than people realize. If you make 15% profit on a flip and it takes you 6 months, your annualized return is 30%. That context changes how you evaluate deals.

I built this calculator and it’s free. It’s called the Flipping Calc. Link is in the description of the corresponding YouTube video.

The advanced settings let you change the profit percentage target. This is useful for anchoring, which we’ll get to in a second.

Anchoring Your Offer

Here’s the technique: when I sit down with a seller to show them my numbers, I run the calculator with a higher profit target. Maybe 20% instead of 15%. That lowers my acquisition price output. I lead with that lower number.

The seller sees the calculator. They see it’s real math, not me pulling a number out of thin air. And they push back. Now we negotiate up from my anchored number.

Had I started at the number I actually want to pay, I’d have no room to come up without going over budget. Start conservative, let them negotiate you toward where you actually want to be.

Common Mistake
There’s a floor on how aggressive you can anchor. Start too low and you blow your authority and credibility. The seller shuts down and the conversation is over. There’s no recovering from a number that feels like an insult. Anchor meaningfully low, not offensively low.

The calculator handles this naturally. Run it at different profit targets and see what the number looks like. If it feels insane even to you, it’ll definitely feel insane to them.

From Contract to Close

Once you have a signed contract, you’ve done the hard part. I’m not going to overcomplicte what happens next, because the title company does most of the work.

Here’s the basic sequence:

  1. Get it to title immediately. Send the contract to your title company the same day you sign it. They’ll reach out to the seller, confirm receipt, and start opening the file. This also starts the clock on the title search.

  2. Title search. The title company goes back through the chain of ownership to make sure there are no liens, ownership disputes, or other clouds on title. This takes a week or two typically.

  3. Lender review (if applicable). If you’re using hard money, your lender will want to see the contract and may order their own appraisal or property review. Get them the contract fast.

  4. Stay close to the seller. Don’t disappear after you get the contract. Follow up. The deal is not closed until it closes. Any number of things can come up, and you want to be the person the seller trusts enough to work through them with you.

  5. Review the closing disclosure. A few days before closing, the title company will send you a HUD or closing disclosure showing all the numbers. Review it carefully. Make sure your costs match what you expected.

  6. Close. You’ll sign a stack of documents, wire your funds (or bring a cashier’s check), and receive the keys. The title company handles the distribution of funds to the seller.

Don’t freak out about the closing documents. There are like 75 different deed types and forms. The title company has done this a thousand times. They’ll guide you through it. Your job is to show up, know your numbers, and sign.

Pro Tip
Get a title company you work with consistently. A title company that knows you, knows your business model, and knows your typical transaction structure will close your deals faster and catch issues earlier. The relationship matters.

The sale is not over until it closes. Things come up in title searches. Lenders ask for more documentation. Sellers get cold feet. Stay engaged, stay responsive, and get it across the finish line.

FAQ

What’s the difference between 70% rule and the flipping calculator?

The 70% rule is a quick mental shortcut. It approximates the right price, but it doesn’t give you profit in dollars, cash requirements, or annualized return. The flipping calculator does all of that. Use the shortcut to quickly screen deals, use the calculator when you’re getting serious about making an offer.

What if the title search reveals a problem?

Common issues: unpaid liens (old contractor liens, tax liens, mechanic’s liens), ownership disputes, or easements that weren’t disclosed. The title company will identify them. Some can be resolved before closing (seller pays off the lien). Some are deal-killers. Either way, you find out during title, not after you own the house. That’s the point of title insurance.

Do I need a buyer’s agent?

No. You can work directly with the seller’s agent on MLS deals. On off-market deals, there’s often no agent involved at all. You’re sophisticated enough to read a contract. If you’re ever unsure about a contract term, pay a real estate attorney to review it. That’s worth far more than paying agent commission.

What happens if the deal falls apart before closing?

Depends on the contract. If you have a contingency period and you back out within it, you typically get your earnest money back. If you back out outside the contingency window, you may lose your earnest money. Read your contract. Know your deadlines. Don’t miss them.

Want More?

The flipping calculator is free. Find it at the link in the corresponding video on @rosspaller on YouTube.

If you want to talk through how the numbers worked on a specific deal you’re looking at, that’s what the Solo Flipper community on Skool is for.