The 70% rule is the most common quick-screen for a flip: maximum offer = (ARV × 70%) - rehab cost. Example: ARV $400K, rehab $50K, max offer = ($400K × 0.70) - $50K = $230K. The buffer covers your financing cost, holding cost, and target profit.

Why 70%? Working backward from typical flip economics: ARV $400K - 6% sale costs ($24K) - 7-9% holding/financing ($30-36K) - rehab $50K - desired profit ($30-50K) = $230-260K acquisition. The 70% rule lands in this range. Tighter markets warrant the 75% rule; competitive markets justify staying at 65%.

Don't fall in love with deals that don't pencil. There will be more.

On-market: MLS, filtered for 30+ days on market, "needs work" listings, and price reductions. Less competition than first-day listings, lower expectations from the seller. Most first flips are sourced this way.

Off-market: direct mail to absentee owners, driving for dollars, wholesaler networks, real estate agents who specialize in distressed sales, and probate/divorce listings. Better margins but slower deal flow and more relationship-building.

Auctions and tax sales: cheapest acquisition path but highest risk - buying sight-unseen, no inspections, deeds with potential title issues. Not recommended for first flip.

Hard money / fix-and-flip loans are the dominant financing tool. They handle distressed properties that conventional won't finance, fund rehab via draws, and close in 7-14 days. Standard structure: 80-90% of purchase + 100% of rehab budget, capped at 70-75% loan-to-ARV. 12-18 month interest-only term. Rate 9-13%, origination 2-4 points.

For a $230K purchase + $50K rehab on a $400K ARV property: hard money lends roughly $230K × 85% + $50K = $245K. Your cash in: $230K - $195.5K = $34.5K (down) + $50K float (rehab cash flow before reimbursement) + $20K closing/carry = ~$60K cash needed.

Cheaper alternatives if available: 401k loan (no underwriting impact, low rate), HELOC on personal residence, partnership with cash investor splitting profit. None of these substitute for a full hard money loan but they reduce cash needed.

Scope first, budget second. Walk the property with a GC and write the scope: kitchen rebuild, master bath, paint throughout, flooring, exterior touch-up, etc. Then price each line item from contractor bids - not estimates. Bids are binding; estimates are dreams.

Match finishes to neighborhood comps. A $20K granite kitchen in a $250K neighborhood doesn't add $20K to ARV. Look at three recently-sold comps in the neighborhood and replicate their finish level. Going one tier above comps is fine; two tiers above is wasted money.

Hold a 15% contingency reserve on top of bid total. First flips almost always uncover surprises - old electrical, plumbing problems, dryrot. Reserve covers them without stopping work.

Price at the median of your three comps initially. List with photos done by a real estate photographer, not the agent's phone. Stage if the comps are staged (most are above $300K).

Holding cost matters: every month you hold the property post-rehab costs roughly 1% of project budget in interest + taxes + insurance + utilities. Pricing too high to "test the market" usually costs more in holding than the higher price recovers.

Get under contract within 30 days of listing if possible. If you're past 60 days, reprice - the original price was wrong.

Flip income is ordinary income, not capital gain. Held under 12 months, taxed at your marginal rate. Section 1031 exchanges do NOT apply to flip property since flips are inventory, not investment held for productive use.

For active flippers, "real estate professional" status under IRS rules can let you deduct flip losses against other income. Consult a real estate CPA before filing.