The 70% Rule; It also counts for Renovation properties in the Pattaya area.
If you’ve spent any time around real estate investors, you’ve probably heard it:
“Just use the 70% Rule.”
But what does that actually mean?
The Formula
Max Offer = (ARV × 70%) – Repair Costs
You should never pay more than 70% of the After Repair Value (ARV) — minus the estimated cost of repairs. The result is your maximum offer price.
Example — Jomtien Market ARV = ฿16,000,000 | Repairs = ฿3,500,000 ฿16M × 70% = ฿11.2M ฿11.2M – ฿3.5M = ฿7,700,000 maximum bid
(฿16M reflects average resale prices for renovated homes in the Jomtien area.)
Done right, a well-chosen renovation property in Jomtien can deliver 20–30% equity uplift upon completion.
Why the 30% Margin Matters
That remaining 30% isn’t just profit — it has to cover everything else:
- Closing costs
- Holding costs
- Financing costs
- Selling costs (agent commissions, etc.)
- Your actual profit — whatever’s left
The 70% Rule works best when your construction team is efficient and reliable, and when interior finishes — typically the largest cost driver — are managed carefully.
The Real Takeaway
The 70% Rule isn’t about the number itself.
It’s about protecting your downside and building in a margin for error — because deals don’t fall apart on paper. They fall apart when you don’t fully understand the numbers going in.
An Alternative Approach: Land + Structure Valuation
Another method for calculating your ceiling bid is to split the property into its two components: land value and house value.
Land Value
Land pricing typically aligns with government appraisals. For reference, we’ve created a dedicated page for calculating land values around Jomtien.
Example: At ฿50,000 per wah, a 100 wah plot (400 sqm) carries a land value of ฿5,000,000.
Pre-Renovation House Value
The structure’s value is estimated using a Bill of Quantities (BOQ) — a detailed document listing every item of work, material, and labour required, with unit costs and quantities. Here, we reverse-engineer that document to assess the property’s pre-renovation worth.
For a home with 200 sqm of built-up area, the pre-renovation build value typically ranges from ฿12,000 to ฿18,000 per sqm.
How to apply it: Go through the BOQ line by line. Assign value to everything that will be retained — electrical wiring, plumbing fixtures, walls, beams, roof structure, and so on. Anything that needs to be replaced gets a value of ฿0, or a negative demolition cost where removal adds expense.
