MAO Calculator
Calculate your Maximum Allowable Offer using the 70% rule or a detailed cost breakdown. Know exactly what to offer on your next deal.
Quick 70% Rule MAO
Detailed Cost Breakdown (Optional)
For a more accurate MAO, enter your specific costs below.
Detailed MAO Analysis
Deal Breakdown
MAO Tips
- •The 70% rule is a quick guideline. Adjust based on your market and risk tolerance.
- •In competitive markets, investors sometimes go up to 75-80% of ARV.
- •Always verify your ARV with recent comparable sales in the area.
- •Add a contingency buffer (10-15%) to your rehab estimate for unexpected costs.
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Understanding Maximum Allowable Offer
The Maximum Allowable Offer is a critical calculation for any fix and flip investor or wholesaler. It ensures you don't overpay for properties and maintains your profit margins.
Two Methods to Calculate MAO
1. The 70% Rule (Quick Method)
MAO = (ARV × 70%) - Rehab Costs
This quick formula is popular because it's simple and builds in a buffer for costs and profit.
2. Detailed Cost Method (More Accurate)
MAO = ARV - Rehab - Buying Costs - Selling Costs - Holding Costs - Desired Profit
This method lets you input specific costs for more accurate analysis.
Pro Tips
- Always add 10-15% contingency to rehab estimates
- Use conservative ARV estimates (lower end of comps)
- Factor in your actual holding timeline
- Know your market - competitive markets may require higher offers
Frequently Asked Questions
What is MAO in real estate?▼
MAO (Maximum Allowable Offer) is the highest price an investor should pay for a property to achieve their desired profit. It accounts for after repair value, rehab costs, holding costs, and profit margin.
How do you calculate MAO using the 70% rule?▼
MAO = (ARV × 70%) - Rehab Costs. For example, if ARV is $300,000 and rehab is $40,000: MAO = ($300,000 × 0.70) - $40,000 = $170,000.
Why do investors use 70% of ARV?▼
The 70% rule leaves 30% of ARV to cover holding costs, buying/selling costs, and profit. This typically breaks down to ~10% for costs and ~20% for profit, though actual numbers vary.
When should I use 75% or 80% instead of 70%?▼
In competitive markets or with lower rehab deals, some investors go to 75-80% ARV. However, this reduces your margin for error and profit. Only do this with experience and when you have reliable cost estimates.
How accurate is the MAO calculator?▼
The MAO calculator is a starting point. Accuracy depends on your ARV and rehab estimates. Always verify ARV with recent comps and get contractor bids for rehab before making offers.