What is the breakdown of the 70% rule?

[Orlando Paz]

I have been using the 70% rule, since learning about it on BP's free book. I've also heard of other percentages as well, but for now focus on only using 70%. My curiosity is on how this percentage came to be? is it comprised of agent fees, and other expenses? I'm just trying to get a deeper understanding of what this percentage means.

[Scott E.]

The rule says you are suppose to take 70% of ARV then subtract out your remodeling costs.

The 30% comprises of your profit, commissions, closing costs, inspections, appraisal, holding costs (taxes, insurance, utilities, landscaping), and staging costs.

I've found that in my market and price point, the properties I aquire meet closer to an "80% Rule"