The House Flipping ROI Calculator: The 70% Rule and the Math Behind It

The problem

You drove past a house with peeling paint and a “For Sale” sign last Tuesday. The neighborhood is good. The lot is great. You ran the numbers in your head on the way home and the deal looks promising — but “looks promising” has cost real estate investors millions of dollars over the years. House flipping does not forgive vibes-based math. A deal that pencils out on a napkin and turns out to need $40,000 in unexpected foundation work goes from a $35,000 profit to a $5,000 loss before you account for the seven weeks of holding costs you did not budget.

The 70% rule is the math that prevents this. It is the foundation of every successful flip and the rule that, when violated, produces every flip-gone-wrong story you read on real estate forums. The rule says: maximum offer = After Repair Value (ARV) × 0.70 − rehab cost. The book walks through the rule, every variable in it, the AI-powered comp analysis that gives you a defensible ARV, the rehab estimation framework that catches the surprises before you write the offer, and the ROI spreadsheet that runs the actual math on every deal you consider.

What most people get wrong

They use the 70% rule without understanding the 30%. New investors hear “70% rule” and apply it like a checklist: ARV times 0.7, minus rehab, done. But the 30% has structure. About 5% is your purchase closing costs. About 8% is selling closing costs (agent commissions, title, closing). About 5% is holding costs (hard money interest, utilities, insurance, taxes for the holding period). About 6% is profit margin. About 6% is contingency. When you skip a flip with a fast nine-week timeline and pay 4% interest on hard money, you can adjust the rule to 75%. When you take on a slow flip with structural risk in a market that is softening, you adjust to 65%. The rule is a starting point — the chapter explains when to flex each direction and by how much.

They underestimate rehab cost by forty percent. Every veteran flipper has a version of “the inspection missed the foundation issue” or “the electrical was worse than the inspector saw.” The room-by-room cost database in the book gives you the going rates for forty common rehab items, organized by tier (basic, mid, high) so you can build the rehab estimate without a contractor present. Then you add the hidden-cost traps: termite damage, asbestos, lead paint, knob-and-tube wiring, galvanized plumbing — each one with the cost range and the inspection step that catches it.

A working approach

The book is built around eight chapters that walk one deal end-to-end. Here is the AI-assisted comp analysis prompt, which is the most-used prompt in the book:

I am evaluating a potential flip. Please analyze comparable sales
to help me estimate the After Repair Value (ARV).

Subject property:
- Address (or neighborhood + zip): [address]
- Beds/baths: [number] / [number]
- Square footage: [number]
- Lot size: [number]
- Condition (current): [poor / fair / good]
- Planned rehab scope: [paste scope of work or describe at high level]
- Expected post-rehab condition: [fair / good / excellent]

Please:
1. List the 4-6 best comparable sold properties within 0.5 miles
   sold in the last 6 months that match the post-rehab condition
2. For each comp, note: address, sold price, sold date, beds/baths,
   sqft, condition, distance from subject
3. Calculate price-per-square-foot for each
4. Suggest an ARV range (low, target, high) with reasoning
5. Note any adjustments needed (renovated kitchen, garage, etc.)
6. Flag if comps are weak (less than 3 strong comps, market shifting,
   etc.) — this is critical for confidence levels

That prompt produces a defensible ARV range you can plug into the 70% rule. The book pairs it with the AI rehab estimation prompt that scales the cost based on square footage and your planned scope. Together the two prompts get you from “this house looks promising” to a number you can offer with confidence in about thirty minutes.

The eight chapters that own a flip-investor’s year:

1. The 70% rule explained — the math, the 30% breakdown, when to adjust
2. Finding deals with AI — AI-powered property search, distressed indicators, building a deal network
3. Rehab cost estimation — the room-by-room cost database, scope of work, contractor validation, hidden cost traps
4. After Repair Value (ARV) analysis — comp selection, adjustments, price-per-sqft, confidence levels
5. Financing and holding costs — hard money, the holding cost calculator, the true cost of timeline overruns
6. The ROI spreadsheet system — the master template, key formulas, scenario analysis, tracking actuals vs estimates
7. Risk mitigation strategies — the five major risks, inspection checklist, insurance, market downturn protection
8. Scaling from 1 to 10 flips — the scaling roadmap, building systems, capital recycling, the 10-flip business plan

The ROI spreadsheet chapter is the closer. The full spreadsheet template covers every variable: purchase price, closing costs (buy and sell), rehab line items (with contingency), holding costs (broken into interest, utilities, taxes, insurance, by month), agent commissions, and three scenario outputs — base case, bear case (rehab over budget 20%, sale at low ARV), bull case (rehab on budget, sale at target ARV). The bear case is the test that separates “deal is good” from “deal is great” — a deal that still makes money under the bear case is the deal you want.

The scaling chapter is the chapter most flippers read after flip three. The math at one flip a year and the math at ten flips a year are different math. Capital recycling, contractor relationships, the bookkeeping system, when to hire your first employee — the chapter is structured as a roadmap, not a how-to.

Where this scales

The article walked through the 70% rule and the AI comp prompt. The book has the full room-by-room cost database (forty rehab items at three tiers), the hidden-cost trap chapter that catches the surprises that produce the loss-making flips, the financing chapter that explains hard money versus conventional versus private money with the real numbers, and the risk-mitigation framework with the five major risks every flipper faces.

The ROI spreadsheet template is the part you keep using forever. The chapter explains every formula. The bonus folder contains the spreadsheet itself, pre-built, formula-wired, with the bear/base/bull scenario blocks ready.

Included with the book

• House Flip ROI Calculator (CSV) — the full ROI spreadsheet with formulas pre-wired, scenario columns ready, and the room-by-room rehab section. Drop your deal numbers in.

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Questions readers ask

Is this investment advice?

No. The book is an educational guide to the math behind house flipping. It is not investment, financial, or legal advice. Consult a real estate attorney, a tax professional, and a licensed inspector for any actual deal.

What if I need a refund?

Checkout runs on Lemon Squeezy. The standard refund window applies. You keep the PDF either way.

Do I need experience to use this?

The book is structured for first-flip investors. The early chapters are heavy on the 70% rule fundamentals; the later chapters scale into multi-flip territory. Experienced flippers tend to use it as a reference for the room-by-room cost database and the scaling chapter.

Does this work in markets outside the US?

The math is universal. The specific dollar ranges in the room-by-room cost database are US-centric (2026 numbers). UK, Canadian, and Australian investors typically use the framework with their own local cost references.