MAO Rechner — Formel

Maximum Allowable Offer (MAO)

The MAO is the highest price you should pay for an investment property to achieve your target return.

The 70% Rule

MAO = ARV x 70% - Rehab Costs

This leaves a 30% buffer for profit, selling costs, and holding costs. Experienced investors may adjust the percentage based on the deal.

Adjusting the Percentage

  • 65%: Conservative (higher-risk areas, uncertain rehab)
  • 70%: Standard (most flip scenarios)
  • 75%: Aggressive (low-risk areas, experienced flipper)
  • 80%: Buy-and-hold (rental investors with lower profit target)

    • Wholesale Adjustment

    If buying from a wholesaler, subtract their assignment fee from the MAO to keep the deal profitable.

    Lösungsbeispiel

    ARV $300,000, rehab $45,000, 70% rule, no wholesale fee, $5,000 buying closing costs.

    1. ARV target: $300,000 x 70% = $210,000
    2. MAO: $210,000 - $45,000 - $0 - $5,000 = $160,000
    3. Total project cost at MAO: $160,000 + $45,000 + $5,000 = $210,000
    4. Estimated profit: $300,000 - $210,000 = $90,000
    5. Purchase as % of ARV: $160,000 / $300,000 = 53.3%
    6. Profit margin: $90,000 / $300,000 = 30.0%