The 70% rule says that an investor should aim to pay no more than 70% of a property's after repair value,
or ARV. This includes the price you pay for the property itself as well as any estimated repair costs.
Of course, this requires quite a bit of estimation. When applying the 70% rule, it's important to use
a realistic estimate of the property's value after repairs are completed,
as well as a conservative estimate of what the repairs will cost.
On the surface, the 70% rule may sound bulletproof. After all, if you pay $70,000
all-in for a property and sell it for $100,000, that's a pretty good profit margin.
However, the 70% rule is designed to ensure that you'll leave some wiggle room
in your budget to account for unexpected costs, as well as expenses such as
closing cost charges, lender fees, and more. In a nutshell, the 70% rule is in
no way a guarantee that you will make money flipping houses in Canada
so it's still important to make sure you manage expenses
and have a clear exit strategy.
Learn more from fellow Canadian real estate investment experts at