70% rule baseline
- ARV $350k, rehab $50k, closing $8k, holding $6k, profit 30%
- MAO ≈ $350k − $50k − $8k − $6k − $0 − $105k = $181k
finance calculator
Max Allowable Offer (MAO) Calculator
Use the 70% rule (or your own target margin) to find a max purchase price for flips or wholesale deals.
Results
- Max allowable offer
- $181,000
- Target profit (dollars)
- $105,000
How to use this calculator
- Enter ARV after repairs.
- Add rehab, closing, holding costs, and any assignment/wholesale fee.
- Set your target profit percentage to calculate the max price you can pay.
Inputs explained
- ARV
- Expected sale price after repairs.
- Target profit %
- Common starting point is 30% (the “70% rule”). Adjust for market/strategy.
- Assignment fee
- If wholesaling, include your fee so the MAO is what you can offer the seller.
How it works
Target profit = ARV × target profit % (e.g., 30% ≈ the classic 70% rule).
MAO = ARV − rehab − closing − holding − assignment fee − target profit.
Formula
Target profit = ARV × Target profit % MAO = ARV − Rehab − Closing − Holding − Assignment − Target profit
When to use it
- Quickly screening flip or wholesale deals with the 70% rule.
- Adjusting target profit for competitive markets or tighter inventory.
- Ensuring rehab/holding/fees are covered before making an offer.
Tips & cautions
- Increase target profit if rehab or market risk is high; decrease if velocity is key.
- Include realistic holding time (taxes, utilities, interest) so MAO isn’t overstated.
- Pair with LTC/LTV to check lender leverage and your cash requirement.
- Simplified; does not include financing points, taxes on profit, or detailed holding period modeling.
- ARV and rehab are estimates—update with inspections/appraisals for accuracy.
- Assignment fee optional; set to zero if you’re taking the project yourself.
Worked examples
Wholesale with fee
- ARV $300k, rehab $40k, closing $7k, holding $5k, profit 25%, fee $10k
- MAO ≈ $300k − $40k − $7k − $5k − $10k − $75k = $163k
Deep dive
Calculate max allowable offer (MAO) using ARV, rehab, closing/holding costs, and a target profit percentage.
Use the 70% rule or your own margin to screen flips and wholesale deals quickly.
FAQs
- Is 70% always the right rule?
- No. It’s a starting point. Adjust profit % for risk, market speed, and your financing costs.
- Should I include financing costs?
- Yes, add points/interest to closing or holding costs to avoid overpaying.
- Does this include taxes on profit?
- No. It’s a quick offer screen. Account for taxes separately when evaluating net profit.
- How do I handle ARV uncertainty?
- Run conservative ARVs and higher rehab numbers to build cushion.
- Is this for wholesaling or flipping?
- Both. Include an assignment fee if wholesaling; set to zero if you’re taking the project down yourself.
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For fast screening only. Verify ARV, rehab, and costs with inspections and lenders before making binding offers.