70 Percent Rule Solution

STEP 0: Pre-Calculation Summary
Formula Used
Maximum Buying Price = (After Repair Value*0.7)-Estimated Repair Costs
BPmax = (ARV*0.7)-ERC
This formula uses 3 Variables
Variables Used
Maximum Buying Price - Maximum Buying Price is the highest amount a buyer is willing to pay for a property, determined by factors such as market conditions, property value, and budget constraints.
After Repair Value - After Repair Value is the estimated value of a property after it has undergone necessary repairs or renovations, typically used in real estate investment calculations.
Estimated Repair Costs - Estimated Repair Costs refer to the projected expenses required to restore or improve a property, usually calculated before initiating renovation or maintenance work.
STEP 1: Convert Input(s) to Base Unit
After Repair Value: 70000 --> No Conversion Required
Estimated Repair Costs: 5500 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
BPmax = (ARV*0.7)-ERC --> (70000*0.7)-5500
Evaluating ... ...
BPmax = 43500
STEP 3: Convert Result to Output's Unit
43500 --> No Conversion Required
FINAL ANSWER
43500 <-- Maximum Buying Price
(Calculation completed in 00.004 seconds)

Credits

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Created by Keerthika Bathula
Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad
Keerthika Bathula has created this Calculator and 50+ more calculators!
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Verified by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
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15 Important Formulas of Mortgage and Real Estate Calculators

Monthly Mortgage Payment
​ Go Monthly Payment = (Mortgage Amount*Interest Rate*(1+Interest Rate)^Compounding Periods)/((1+Interest Rate)^Compounding Periods-1)
Break Even Ratio
​ Go Break Even Ratio = (Debt Servicing Costs+Operating Expenses)/Gross Operating Income
Debt Service Coverage Ratio using ADS
​ Go Debt Service Coverage Ratio = Net Operating Income-Annual Debt Service
70 Percent Rule
​ Go Maximum Buying Price = (After Repair Value*0.7)-Estimated Repair Costs
Capitalisation Rate
​ Go Capitalisation Rate = (Net Operating Income/Current Market Value)*100
Gross Rent Multiplier
​ Go Gross Rent Multiplier = Property Value/Potential Gross Rental Income
Loan to Value Ratio
​ Go Loan to Value Ratio = (Mortgage Amount/Appraised Property Value)*100
Price per Square Foot
​ Go Price per Square Foot = Property Sale Price/Total Square Footage
Price to Rent Ratio
​ Go Price to Rent Ratio = Median Home Price/Median Annual Rent
Rental Yield
​ Go Rental Yield = (Annual Rental Income/Property Value)*100
Land to Building Ratio
​ Go Land to Building Ratio = Area of Land/Area of Building
Commission Value
​ Go Commission Value = Commission Rate*Final Sale Price
Floor Area Ratio
​ Go Floor Area Ratio = Gross Floor Area/Total Lot Size
Return on Equity
​ Go Return on Equity = Annual Return/Total Equity
Debt Ratio
​ Go Debt Ratio = Total Debt/Total Assets

70 Percent Rule Formula

Maximum Buying Price = (After Repair Value*0.7)-Estimated Repair Costs
BPmax = (ARV*0.7)-ERC

What is 70 Percent Rule ?

The 70 Percent rule in real estate investment is a guideline used by investors to estimate the maximum purchase price they should pay for a property based on its After Repair Value (ARV) and estimated repair costs. The rule suggests that investors should not pay more than 70% of the ARV minus estimated repair costs to ensure a sufficient margin for potential profit after accounting for expenses and contingencies.

How to Calculate 70 Percent Rule?

70 Percent Rule calculator uses Maximum Buying Price = (After Repair Value*0.7)-Estimated Repair Costs to calculate the Maximum Buying Price, The 70 Percent Rule helps you and your client determine whether or not they should invest in a property. Maximum Buying Price is denoted by BPmax symbol.

How to calculate 70 Percent Rule using this online calculator? To use this online calculator for 70 Percent Rule, enter After Repair Value (ARV) & Estimated Repair Costs (ERC) and hit the calculate button. Here is how the 70 Percent Rule calculation can be explained with given input values -> 43500 = (70000*0.7)-5500.

FAQ

What is 70 Percent Rule?
The 70 Percent Rule helps you and your client determine whether or not they should invest in a property and is represented as BPmax = (ARV*0.7)-ERC or Maximum Buying Price = (After Repair Value*0.7)-Estimated Repair Costs. After Repair Value is the estimated value of a property after it has undergone necessary repairs or renovations, typically used in real estate investment calculations & Estimated Repair Costs refer to the projected expenses required to restore or improve a property, usually calculated before initiating renovation or maintenance work.
How to calculate 70 Percent Rule?
The 70 Percent Rule helps you and your client determine whether or not they should invest in a property is calculated using Maximum Buying Price = (After Repair Value*0.7)-Estimated Repair Costs. To calculate 70 Percent Rule, you need After Repair Value (ARV) & Estimated Repair Costs (ERC). With our tool, you need to enter the respective value for After Repair Value & Estimated Repair Costs and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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