Every fix-and-flip investor in Florida eventually runs the 70% rule. Most run it wrong. Not because the math is complicated it isn’t but because the rule was designed for a market where rehab costs were lower, insurance was predictable, and hard money rates hadn’t reached 10% to 13%. Running the standard formula in Florida’s 2026 environment without adjusting the inputs produces offers that look profitable on a spreadsheet and lose money in real life.
The 70% rule states that an investor should pay no more than 70% of a property’s after-repair value (ARV) minus the estimated cost of repairs. On a property with a $350,000 ARV and $60,000 in estimated rehab costs, the maximum allowable offer (MAO) is: ($350,000 × 0.70) – $60,000 = $185,000. That 30% margin is supposed to cover acquisition costs, financing, holding costs, selling costs, and profit. In Florida’s current market, that 30% runs thin. The Freddie Mac Primary Mortgage Market Survey benchmark rate stood at 6.46% as of April 2, 2026. Hard money rates for Florida fix-and-flip loans are running 10% to 13%, with 2 to 4 origination points. Hold any significant rehab for 6 months in that rate environment and the financing cost alone consumes 5% to 7% of ARV.
This article gives you the full mechanics of the 70% rule, why it needs to be adjusted for Florida specifically, and the modified formula that professional Florida flippers are actually using in 2026. By the time you finish reading, you will know how to calculate your maximum allowable offer, what inputs to use for Florida’s cost environment, and where the rule breaks down in specific market conditions. This is not theory. This is the math behind every offer a serious Florida investor makes before they submit it.
What You Will Learn From This Article
- The standard 70% rule formula and exactly how to calculate your maximum allowable offer on any Florida property
- Why the 30% margin built into the standard formula is insufficient for many Florida flips in 2026, and what specific costs eat into it
- The modified 65% to 67% rule that experienced Florida investors are using in the current financing environment, and when to go lower
- How Florida-specific costs insurance on vacant rehab properties ($2,500 to $4,500 per year), permit timelines that extend hold periods, and contractor pricing that has run 12% to 20% above national averages change the formula compared to national guides
- The after-repair value calculation method that Florida investors use, why Zillow and online AVM estimates are unreliable for this calculation, and what data source actually works
- The three financing structures for Florida fix-and-flip deals in 2026 hard money, private lender, and cash and how each changes the 70% rule calculation
- Getting 2 to 3 hard money quotes before submitting an offer is the difference between protecting your margin and giving it away: rate spreads of 1% to 2% on a 6-month, $200,000 loan are $2,000 to $4,000 in additional interest that comes directly out of your profit
The 70% Rule: The Formula and What It Actually Calculates
The 70% rule is a quick-filter tool, not a comprehensive deal analysis. Understanding what it calculates and what it does not is the first step to using it correctly.
The formula: Maximum Allowable Offer (MAO) = (After Repair Value × 0.70) – Estimated Repair Costs
The 30% buffer between your purchase price plus repairs and the property’s after-repair value is designed to cover four categories of cost: acquisition and closing costs, financing and holding costs during the rehab, selling costs, and profit. It does not give you a specific profit number. It tells you the maximum price at which the deal has a reasonable chance of generating acceptable returns if your cost estimates are accurate.
The formula assumes the following cost structure within that 30% buffer:
- Acquisition and closing costs (title, deed recording, inspection, purchase closing): approximately 1% to 2% of purchase price
- Financing costs (hard money interest, origination, extension fees): 5% to 10% of ARV depending on loan amount and hold time
- Holding costs (utilities, insurance, property taxes, HOA if applicable): 1% to 3% of ARV depending on hold duration
- Selling costs (agent commissions, closing costs, seller concessions): 6% to 9% of ARV
- Profit: the remainder, which should be at minimum 10% to 15% of ARV to justify the risk
If you add up the low end of each of those ranges 1% acquisition + 5% financing + 1% holding + 6% selling = 13% in costs plus a 10% minimum profit target, you get 23% total. The 30% buffer covers that with 7 points of cushion for cost overruns. In a stable, low-financing-cost environment, 30% is workable.
In Florida in 2026, the ranges move upward across nearly every category. That is where the formula starts to fail investors who are running numbers from a national template.
Why the Standard 70% Rule Needs Florida Adjustments in 2026
Florida is not a generic market, and the 70% rule’s generic inputs produce offers that look right but miss the Florida-specific cost structure. Four factors consistently inflate costs beyond what the standard 30% buffer accommodates.
Factor 1: Financing Costs in the Current Rate Environment
Hard money lending rates for Florida fix-and-flip loans are running 10% to 13% annualized interest, with 2 to 4 origination points, per current market data from Florida hard money lenders. On a $200,000 loan at 11% interest with 3 origination points on a 6-month hold, the financing cost is:
- Origination: $6,000 (3% of $200,000)
- Interest (6 months): $11,000 (11% × $200,000 × 0.5 years)
- Total financing cost: $17,000
That $17,000 represents 8.5% of a $200,000 purchase price, or roughly 4.9% of a $350,000 ARV. The standard 70% rule’s assumed financing budget of 5% to 7% of ARV barely covers this at the low end, and is insufficient if the project runs over timeline which in Florida’s current permitting environment, it often does.
Factor 2: Insurance on Vacant Rehab Properties
Standard homeowners insurance does not cover a property undergoing active renovation. Investors need vacant property insurance and, in most Florida markets, a builder’s risk policy for the duration of the rehab. Vacant property insurance in Florida runs $2,500 to $4,500 per year for a mid-market property, depending on location, construction type, and roof condition. That is $1,250 to $2,250 per year of holding cost that many investors using a national template simply fail to include. On a 6-month hold, that adds $625 to $1,125 in insurance cost before you’ve accounted for homeowners insurance on the finished property during any post-rehab holding period.
Factor 3: Florida Permit Timelines
The permit approval timeline in Florida varies dramatically by county. In Broward County and Miami-Dade, structural and electrical permits that require inspections can take 4 to 8 weeks to pull and pass, adding time to every project. In Orange County and Hillsborough County, the timeline is shorter for straightforward cosmetic rehabs but can stretch to 10 to 16 weeks for projects requiring engineering sign-off. Every week the project sits waiting for permits is a week of hard money interest running. Investors who budget for a 90-day flip in Florida and face a 150-day actual timeline due to permitting have added 60 days of financing costs to the deal. At 11% annualized interest on $200,000, that is approximately $3,600 in additional financing cost.
Factor 4: Florida Contractor Pricing
Construction and rehab contractor pricing in Florida has escalated significantly since 2020. Florida TaxWatch data cited in ACT Global Media’s cost-of-living research shows that construction cost increases in Florida have outpaced the national average. Based on market observation across multiple Florida rehab projects, contractor labor and materials pricing in Florida is running 12% to 20% above the national average for comparable work. An investor who uses a national rehab cost estimate from a ProEst or Marshall Valuation Service table without Florida-adjusting it will underestimate their rehab budget. On a $60,000 estimated rehab, a 15% Florida cost premium represents $9,000 in additional cost that goes directly against the profit margin.
The Modified 70% Rule for Florida 2026
| Market Condition | Standard Rule | Florida 2026 Adjustment | Adjusted Rule |
| Financing cost (6-month hard money) | ~5% of ARV assumed | 8-11% of ARV at current rates | Use actual financing cost, not % assumption |
| Insurance (vacant + builder’s risk) | Often excluded | $1,250 to $2,250 per 6 months | Add explicitly |
| Contractor cost premium | National avg. | +12-20% above national | Adjust rehab estimates upward |
| Permit/hold timeline buffer | 90-day assumption common | Budget 120-150 days | Add 1-2 months extra hold cost |
| Minimum profit target | Embedded in 30% | Minimum $25,000-$35,000 for $300K-$400K ARV deals | Set in dollar terms, not % |
| Effective rule in this environment | 70% rule | 65-67% rule |
Sources: Current hard money rate data from Florida private lending market observation; Florida contractor cost premium from Florida TaxWatch cost analysis and field observation; permit timelines from Orange County, Broward County, and Hillsborough County public permit data. All figures are approximations; actual costs vary by project, market, and contractor.
The table explains why professional Florida investors in 2026 are effectively applying a 65% to 67% rule rather than the standard 70%, even when they continue to call it the 70% rule. The difference between 70% and 65% on a $350,000 ARV is $17,500 in maximum allowable offer. That $17,500 is not lost profit it is the buffer that absorbs Florida’s specific cost premiums.
How to Calculate After-Repair Value (ARV) in Florida
The 70% rule is only as good as the ARV estimate it is based on. Overestimate ARV by $30,000 on a $350,000 property and your actual margin shrinks by $21,000 at 70%. This is where most new investors make their biggest errors.
What ARV Is Not
ARV is not what Zillow says the property will be worth after renovation. Zillow’s automated valuation model uses statistical regression across broad geographies and does not account for the specific neighborhood dynamics, buyer pool, and comparables that determine what a renovated property will sell for in a specific Florida zip code. The Zestimate may be within 5% to 10% of market value for a stabilized property with a clean sales history. For a property that has been vacant, deferred, or in distress the type of property a fix-and-flip investor is buying the Zestimate is frequently wrong in either direction.
ARV is also not what the property is worth today. It is what comparable recently renovated properties in the same micro-neighborhood have sold for, applied to your subject property after the planned renovation. The key word is “comparable” same general size, same bedroom/bath count, same era of construction, same school district, and similar lot characteristics.
The Florida ARV Process That Works
The professional approach to Florida ARV involves three steps. First, pull the last 6 months of closed sales within a half-mile to one-mile radius of the subject property, filtering for properties of similar size (within 15% of subject’s square footage) and similar bedroom/bath configuration. In dense urban markets like Fort Lauderdale, a half-mile radius works. In suburban Ocala or Brevard County, you may need to expand to 1.5 miles.
Second, identify which of those comparables are “renovated” meaning they show updated kitchens, bathrooms, and flooring in listing photos. These are your true ARV comparables. Distressed or original-condition sales in the same neighborhood are useful for understanding acquisition pricing, not ARV estimation.
Third, adjust for the specific improvements your renovation will deliver. If comparable renovated properties averaged $195 per square foot in that zip code and your renovation will match their finish level, your ARV is approximately square footage times $195. If your renovation will deliver a step below their finish level, discount 3% to 5%. If above, add 3% to 5%.
The Florida-specific issue that complicates ARV in coastal markets: insurance costs affect what buyers can afford in PITI, which caps what they will pay for a property. In Lee County or Charlotte County in Southwest Florida, a $350,000 renovated home may carry $8,000 per year in insurance, which adds $667 per month to the buyer’s payment at current rates and reduces the pool of buyers who can qualify. This can suppress ARV in coastal markets relative to what the comparable sales data alone would suggest. (Source: Insurify 2026 Florida homeowners insurance data)
Calculating Your Maximum Allowable Offer: Step by Step
With an accurate ARV and a Florida-adjusted cost structure, the MAO calculation becomes straightforward. Here is the full sequence:
- Establish ARV using the process above. Be conservative: if your comparable range is $340,000 to $365,000, use $340,000 for your MAO calculation.
- Apply the Florida-adjusted multiplier. For most Florida markets in 2026 with hard money financing: use 65% to 67%.
- Estimate repair costs using a detailed Florida-adjusted scope of work. Do not use national per-square-foot templates without adjusting upward by 12% to 20%.
- Calculate MAO: (ARV × 0.65) Repair Costs = Maximum Allowable Offer.
- Build your full deal stack to verify the margin makes sense:
- Purchase price (your offer)
- Acquisition closing costs (typically $3,000 to $5,000 in Florida)
- Repair costs (your detailed estimate)
- Financing costs (calculate from actual hard money terms: points + interest for estimated hold period)
- Holding costs (insurance $1,250 to $2,250; taxes prorated; HOA if applicable; utilities)
- Selling costs (6% commission + 2% closing costs = 8% of ARV is a conservative estimate)
- Total cost stack
- ARV minus total cost stack = projected profit
- If projected profit is below $25,000 on a sub-$300,000 ARV deal or below $35,000 on a $300,000 to $450,000 ARV deal, the deal does not have adequate margin for the Florida risk environment. Walk away or renegotiate.
A Real-World Scenario: Sofia in Fort Lauderdale
Sofia is a Broward County real estate agent with two flips under her belt in Pembroke Pines. She identifies an off-market 3/2 in Dania Beach priced at $245,000 with a motivated seller. The house was built in 1973, has original kitchen and baths, and needs a new roof. Her comparable analysis shows renovated 3/2s in Dania Beach from 1,200 to 1,400 square feet selling at $395,000 to $420,000 in the past 6 months. She uses $395,000 as her ARV (conservative end).
Her detailed repair estimate:
- Roof replacement: $18,000
- Kitchen (cabinets, counters, appliances): $22,000
- Two bathroom renovations: $14,000
- Flooring throughout (tile/LVP): $9,500
- Interior paint: $4,200
- HVAC service and minor repair: $2,800
- Electrical panel upgrade (required for permit): $3,500
- Landscaping and exterior: $4,000
- Miscellaneous permits, inspections, dumpsters: $3,200
- Total rehab: $81,200
She applies the 65% rule: ($395,000 × 0.65) $81,200 = $256,750 – $81,200 = $175,550 maximum allowable offer.
The seller is asking $245,000. Sofia’s MAO is $175,550. The gap is $69,450. She walks away.
She runs the 70% standard: ($395,000 × 0.70) – $81,200 = $276,500 – $81,200 = $195,300. Still a $49,700 gap from asking price.
The deal does not work at $245,000 for a renovated exit. What Sofia has done correctly is established that the seller’s price expectation is incompatible with profitability. She moves on. She does not negotiate up from her MAO. The formula’s purpose is to identify when a deal is not a deal.
The non-obvious Florida dimension: the roof replacement Sofia budgeted at $18,000 is a 1,300 square foot Broward County house with open permit potential. Broward County inspectors require roof permits and may flag an unpermitted roof, triggering additional inspection costs. Sofia’s $18,000 budget already includes the permit fee and passed-inspection allowance. Investors who use national roof cost templates that do not include permit costs underbudget this line item by $1,500 to $3,000 in Florida coastal counties.
How to Finance a 70% Rule Deal in Florida 2026
Your financing structure directly determines whether the 70% rule produces an accurate MAO calculation. The cost of money varies substantially across the three main fix-and-flip financing approaches, and each changes the formula differently.
Hard Money Loans: The Most Common Florida Fix-and-Flip Vehicle
Hard money lenders provide short-term financing (6 to 24 months) secured by the property, based primarily on the property’s ARV rather than the borrower’s income. Typical Florida hard money terms in 2026:
- Interest rate: 10% to 13% annualized
- Origination points: 2 to 4 points
- LTV: 60% to 75% of ARV or 80% to 90% of purchase price, whichever is lower
- Term: 6 to 18 months with extension options
- Speed: 7 to 14 business days to close
Hard money is the fastest and most flexible financing vehicle for fix-and-flip, but it is also the most expensive. At 12% interest with 3 origination points on a $200,000 loan for 8 months, total financing cost is: $6,000 (points) + $16,000 (interest) = $22,000. That is 5.6% of a $395,000 ARV, consuming a significant portion of the 35% buffer in the 65% rule.
Private Lenders: Lower Rates, Higher Relationship Barrier
Experienced investors with a track record often access private capital from individual investors at rates of 7% to 10%, with 0 to 2 origination points. This substantially improves the financing cost component of the deal stack. The barrier: private capital requires trust and a demonstrated track record. New investors typically cannot access private money for their first 1 to 3 transactions.
Cash: Eliminates Financing Costs, Maximizes Flexibility
All-cash purchases eliminate the financing cost component entirely, converting the financing column in the cost stack to $0. This allows an investor to offer up to the full 70% of ARV minus repairs and still achieve their profit target because the 30% buffer is not being partially consumed by interest and points. Cash also dramatically speeds the acquisition process: Florida title companies can close all-cash transactions in 5 to 10 business days. The constraint is capital: most individual investors cannot fund multiple projects simultaneously in cash.
Fix-and-Flip Financing Cost Comparison for a $200,000 Loan, 8-Month Hold
| Financing Type | Interest Rate | Points | Total Financing Cost | As % of $395K ARV |
| Hard money (current market) | 11-12% | 3 points | $19,333 $22,000 | 4.9% 5.6% |
| Hard money (low end) | 10% | 2 points | $17,333 | 4.4% |
| Private lender | 8% | 1 point | $12,667 | 3.2% |
| Cash purchase | 0% | 0 | $0 | 0% |
| Conventional investment loan | N/A | N/A | Not suitable for short hold | N/A |
Sources: Current hard money lending rate data from Florida market observation; private lender rates from investor network data; calculations based on simple interest on $200,000 for 8 months. Actual terms vary by lender, borrower experience, and market. Always obtain multiple quotes before committing to a financing structure.
The table makes the financing decision concrete: the difference between the high-end hard money scenario ($22,000) and a private lender ($12,667) is $9,333 in additional cost on a single deal. Across 3 deals per year, that is $28,000 in additional financing expense. Building relationships that provide access to lower-cost capital is one of the highest-ROI activities available to a Florida fix-and-flip investor.
From My Experience: Florida Market Insight
Working in Polk County and the Ocala market over the past several years, the error I observe most consistently among investors running the 70% rule is using square footage as the primary driver of their ARV calculation without adequate comparable sales research. The impulse is understandable: it is much faster to multiply square footage by a dollars-per-square-foot estimate than to pull and analyze comparable sales. But in Florida, the dollar-per-square-foot metric varies dramatically not just by county but by specific neighborhood and even by street. Two homes on adjacent streets in Polk County’s Lakeland market can have ARVs that differ by $40 per square foot based solely on school attendance zone and street-level demand. Using the county average in that scenario misprices every offer.
The insurance calculation omission is the single most common dollar-line error I see in investor pro formas. Investors in their first year of Florida fix-and-flip typically budget for the insurance they are familiar with primary residence insurance, which they are paying $1,800 to $2,500 per year on their own home. They apply that mental model to an investment rehab and assume similar costs. The reality is that vacant rehab property insurance in Florida runs 2 to 3 times a standard homeowners policy. When I walk investors through the actual cost stack on a Polk County or Ocala deal, the insurance line item is frequently the first number that requires revision upward. The consequence of underestimating it is not catastrophic on a single deal it is $1,000 to $2,000 in margin erosion but it compounds across every deal in the portfolio.
What mainstream fix-and-flip content gets wrong about the 70% rule in Florida is treating it as a universal formula that applies equally in all markets. The content that ranks for “70% rule real estate” overwhelmingly comes from national sources that use examples from Phoenix, Cleveland, or generic Sun Belt suburbs. Florida has four features that distinguish it from most national examples: a permit and inspection environment that significantly extends project timelines in coastal counties; an insurance market that adds a cost layer that does not exist at comparable scale in most other states; a contractor market that has been supply-constrained since 2020 and runs materially above national average pricing; and a buyer pool in coastal markets that is specifically limited by the insurance cost of ownership. These four features are not minor adjustments. They are the difference between a formula that produces accurate offers and one that produces consistently underbid or overleveraged transactions.
In the Ocala market specifically, I observe a pattern that contradicts the national narrative about inland Florida being an easy, low-cost market for fix-and-flip. Ocala’s price points are lower than coastal markets, which is accurate. But the contractor availability in Ocala is also lower: the same labor shortage that affects Tampa Bay and Orlando affects Ocala, but with fewer competing bids available. Investors who move from coastal markets to Ocala expecting lower contractor costs sometimes discover that bids are comparable on a per-project basis because scope has to be smaller to hit similar price points, not because labor is cheaper.
Common Mistakes Florida Fix-and-Flip Investors Make
Mistake 1: Using Online ARV Estimates Instead of Comparable Sales Analysis Zillow’s Zestimate, Redfin’s estimate, and similar automated valuation tools are designed for consumer decision-making about primary residences, not for investment analysis. These tools are not accurate enough for MAO calculations: a 5% error in ARV on a $375,000 property is an $18,750 swing in your maximum allowable offer. Investors who build their offer calculations on AVM-derived ARVs regularly overpay for acquisitions because they are working from inflated or deflated data. The solution is 6 months of comparable closed sales, pulled from MLS or a licensed agent, filtered for renovated properties within relevant size parameters and geographic proximity. In Florida specifically, seasonal sale price patterns in coastal markets can distort AVM calculations that do not time-weight recent months appropriately.
Mistake 2: Applying the 70% Rule Before Estimating Actual Repair Costs The 70% formula requires a repair estimate as an input. Using a vague “light rehab” or “heavy rehab” category instead of a line-by-line scope of work produces MAO calculations that look clean and are inaccurate. In Florida, the variable between two 3-bedroom 1970s homes can be massive depending on: roof condition and remaining life, electrical panel compliance (60-amp panels are common in older Florida construction and require upgrading to 100 or 200 amp for modern HVAC and appliances), presence of polybutylene plumbing (common in 1980s-1990s Florida construction), and presence of Chinese drywall in construction from 2001 to 2009. Each of these items represents $5,000 to $25,000 in repair cost that does not appear in a summary estimate. Investors who walk a property without looking for these Florida-specific issues bid wrong.
Mistake 3: Not Accounting for the Full Cost of Financing Most investors calculate interest correctly. Few calculate the total financing cost stack: origination points, extension fees if the project runs over, draw inspection fees (many hard money lenders charge $300 to $500 per draw inspection), and prepayment vs. post-payment interest structures. Hard money lenders have different interest structures: some charge interest only on drawn funds, others charge interest on the full loan commitment from day one. On a $200,000 loan commitment with $150,000 drawn by month two, the difference between these structures is $500 per month in interest cost. On a 9-month project, that is $4,500. Investors who do not read and model the specific term sheet before acquiring a property discover these costs at the worst possible time.
Mistake 4: Ignoring Seasonal Market Timing in Florida Exit Strategy Florida’s resale market has meaningful seasonality that affects not just price but days-on-market. The primary season for high-volume Florida resale is October through April, when seasonal residents and northern buyers are actively in the market. A flip that completes in June through August in a coastal Florida market will sit longer than one completing in February or March, adding 30 to 90 days of holding cost that erodes margin. Investors who acquire in March for a 90-day renovation exit in June are exiting into the slowest part of the Florida buyer season. They would have been better served acquiring in August for a November completion. Not all properties are affected equally primary residence markets in inland counties are less seasonal but coastal and vacation-adjacent markets follow this pattern reliably.
Mistake 5: Forgetting Title Search for Tax Liens and Code Violations Florida properties with deferred maintenance histories frequently carry municipal code violations, unpaid water bills that become liens, or outstanding property tax obligations. In Florida, certain municipal and county code violation liens survive foreclosure and title transfer meaning the new owner inherits them. An investor who acquires a Broward County property without a thorough lien and violation search may discover $8,000 to $25,000 in inherited obligations after closing. Title insurance covers most of these when the policy is written correctly, but only if a thorough search was conducted and the policy is structured to cover municipal code violations. Some title companies offer policies that exclude municipal liens at lower cost. Always confirm the title commitment specifically covers municipal code violations before closing.
Mistake 6: Using the 70% Rule as the Only Evaluation Filter The 70% rule tells you whether a deal has potential margin. It does not tell you whether the deal is the right deal at this moment in this market. Two deals that both pass the 65% rule test both have MAOs above asking price, both pencil to projected profit above your minimum may have very different risk profiles. The one in a zip code with 90 days of supply on renovated properties is riskier than the one where renovated comps are selling in 21 days. Market absorption rate, buyer demand depth, and neighborhood trajectory are inputs the 70% rule does not measure. Professional investors use the rule as a first filter and then apply market analysis as a second filter. Both filters must pass for the deal to proceed.
Final Analysis
The 70% rule has been central to fix-and-flip analysis for decades because it translates a complex set of cost projections into a single, quickly calculable number. That simplicity is its strength and its weakness. The rule is a compression of dozens of assumptions about what costs look like in a given market and rate environment. In Florida’s 2026 conditions, those assumptions are systematically off in the direction of understating costs.
The underreported aspect of the current Florida fix-and-flip environment is the way insurance costs interact with buyer qualification to suppress ARV in coastal markets. An investor in Sarasota County or Collier County modeling ARV from comparable sales data may be using pre-crisis insurance comparables properties that sold when insurance ran $2,800 per year to establish ARV for a property that will sell with $6,500 to $8,500 in annual insurance. The new buyer’s PITI at that insurance level is materially higher than the comparable buyer’s PITI was when the comp sold. At the Freddie Mac benchmark rate of 6.46%, a $150 per month insurance increase reduces qualifying loan amount by approximately $24,000. This means the ARV you calculate from closed sales data may overstate the ARV that the current buyer pool can afford a distinction that does not appear in any standard 70% rule formula.
Two data points not covered elsewhere in this article: the National Association of Realtors’ 2024 Profile of Home Buyers and Sellers documented that median days on market for all homes increased from 2022 levels, with investment-grade price points (entry-level and move-up) showing more sensitivity to rate-induced buyer compression than luxury properties. And per Construction Coverage’s national contractor pricing data, Florida’s construction cost per square foot for renovation work ranks in the top 10 states nationally, driven by labor demand, insurance requirements for workers, and material transportation costs in a peninsula geography. Both of these conditions favor conservative ARV estimation and conservative repair budgeting exactly the direction in which Florida’s 65% to 67% rule adjustment points.
For Florida investors actively evaluating deals in 2026: the mathematical precision of the 70% rule is only as good as the accuracy of the inputs. The market delivers accurate ARVs through comparable sales, not automated estimates. It delivers accurate repair costs through contractor bids, not templates. And it delivers financing costs through actual term sheets, not assumed percentages. Investors who invest the time in accurate inputs are using the rule correctly. Investors who shortcut the inputs are not doing a calculation. They are doing rationalization.
Frequently Asked Questions
What is the 70% rule in real estate and how do I calculate it? The 70% rule states that you should pay no more than 70% of a property’s after-repair value (ARV) minus estimated repair costs. The formula is: Maximum Allowable Offer = (ARV × 0.70) Repair Costs. On a property with a $350,000 ARV and $55,000 in estimated repairs: ($350,000 × 0.70) $55,000 = $245,000 – $55,000 = $190,000 maximum offer. The 30% buffer between your acquisition-plus-repair cost and ARV is designed to cover financing, holding costs, selling costs, and profit. In Florida’s 2026 environment, many experienced investors apply 65% rather than 70% to account for elevated financing and insurance costs.
Does the 70% rule work in Florida’s current market? The standard 70% formula works as a first-pass filter, but needs adjustment for Florida’s specific cost environment. Hard money financing in Florida currently runs 10% to 13% interest plus 2 to 4 origination points substantially higher than what the rule’s embedded assumptions account for. Vacant property insurance for Florida rehab projects runs $2,500 to $4,500 per year. Contractor pricing in Florida runs 12% to 20% above national averages. For these reasons, professional Florida investors in 2026 are effectively applying 65% to 67% of ARV as their ceiling, not 70%. The modification is not a rule change it is an honest accounting of what Florida’s costs actually are.
How do I calculate ARV in Florida accurately? Use comparable closed sales, not automated valuation tools. Pull the last 6 months of closed sales within a half-mile to one mile of your subject property (expand to 1.5 miles in suburban markets like Ocala or Brevard County). Filter for properties that sold as renovated updated kitchens, bathrooms, and flooring visible in listing photos. These are your true ARV comparables. Calculate the median price per square foot for those renovated comparables and apply it to your subject property’s square footage. In coastal Florida markets, adjust downward if insurance costs are materially higher than they were when your comps sold, because elevated insurance premiums reduce what today’s buyers can qualify for at current mortgage rates.
What repairs should I not forget to budget in a Florida flip? Four Florida-specific repair categories are systematically underestimated: roof replacement including permitting costs ($15,000 to $25,000+ depending on roof size and county permit requirements); electrical panel upgrades (many Florida homes built before 1995 have 60-amp or 100-amp panels that require upgrading to 200-amp for modern HVAC systems, costing $2,500 to $6,000 including permit); polybutylene plumbing replacement in homes built 1978 to 1995 (this material has a failure rate issue and will cause buyers to either demand replacement or reduce offers, costing $8,000 to $18,000 for a full repipe); and HVAC replacement (Florida’s year-round AC use means systems age faster than in northern markets, and a 15+ year old system will need replacement disclosure at sale regardless of function).
How much can I make on a flip in Florida using the 70% rule? This depends on three factors: the accuracy of your ARV, the accuracy of your repair estimate, and the cost of your financing. At 65% of ARV with accurate repair estimates and hard money financing in the current range, typical net profit on a $350,000 to $450,000 ARV project in Florida runs $25,000 to $55,000, after all costs. Projects on the lower end of that range tend to have higher financing costs or longer hold periods. Projects at the higher end typically have lower acquisition costs relative to ARV (bought at 60% or below), shorter hold periods, or private money at lower rates. Nationally published “average flip profit” figures are not reliable Florida benchmarks use your own deal stack model with actual local costs
What is the difference between the 70% rule and the maximum allowable offer (MAO)? They calculate the same number using the same formula the terms are used interchangeably. Maximum Allowable Offer (MAO) is the industry terminology for the result of the 70% rule calculation: the maximum price you should pay for a property. Both equal (ARV × 0.70) Repair Costs. Some investors and wholesalers use MAO specifically to emphasize that this is a ceiling, not a target the goal is to acquire at or below the MAO, never above it. In practice, the more conservative you are with both your ARV estimate and your repair budget, the more accurate your MAO will be.
Can I use the 70% rule for BRRRR deals in Florida? The 70% rule applies to exit-by-sale scenarios. For BRRRR (Buy, Rehab, Rent, Refinance, Repeat) deals, the relevant exit calculation is the stabilized rental value versus the refinanced loan amount, not ARV in the flip sense. However, the discipline of the 70% rule specifically its insistence on accounting for all costs before acquisition applies directly. BRRRR investors in Florida should run a full cost stack including rehab, holding, and financing costs against the expected refinance appraisal value and long-term rental income. In Florida’s current rate environment, BRRRR math is challenging at conventional refinance rates of approximately 7% to 8% for investment properties; the deal needs to pencil at those rates, not at the purchase financing rate.
Disclaimer
This article is for educational and informational purposes only. It does not constitute mortgage advice, financial advice, legal advice, or an offer to lend. Examples and figures used are illustrative only and may not reflect current rates, program availability, or individual eligibility. Program requirements, lender overlays, and market conditions vary by lender, borrower profile, and property type. Always consult a licensed mortgage professional, financial advisor, or attorney before making any financial decision. ACT Global Media is not a mortgage lender, mortgage broker, or financial advisor.
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