The MAO (Maximum Allowable Offer) Calculator Guide

What MAO Is And Why It Matters

Maximum Allowable Offer (MAO) is the highest price an investor can pay for a property while still meeting their profit, risk, and cost targets. Wholesalers use MAO to work backward from the ARV and repair costs so they can lock up deals at prices attractive enough to sell to flippers or landlords and leave room for their own assignment fee.

The Classic Wholesaler MAO Formula

A widely used wholesaler formula is:

MAO = (ARV × 70%) - Repairs - Wholesale Fee

This is a wholesaler‑specific version of the 70% rule, where:

Many flippers target a maximum purchase price of roughly 70% of ARV minus repair costs.
Wholesalers then subtract their intended wholesale (assignment) fee from that investor‑level maximum offer to arrive at the price they can pay the seller.

Several investing and analysis resources describe this approach, often as the 70% rule plus assignment fee.

Basic Investor 70% Rule

The underlying investor formula is often written as:

Investor Max Offer = (ARV × 70%) - Repairs

Guides on flipping and wholesaling describe this as a quick rule of thumb to avoid overpaying for rehab properties.

Adding The Wholesale Fee

Once you know what a flipper can likely pay, you subtract your assignment fee:

Wholesaler MAO = Investor Max Offer - Wholesale Fee

This structure—investor cap first, wholesaler MAO second—is widely discussed in wholesaling education materials.

What The 30% Margin Really Covers

When you see “70% rule”, the other 30% of ARV is not pure profit; it is a combined cushion that usually covers:

Closing costs on purchase and resale: title insurance, transfer taxes, escrow fees, commissions, and other transaction costs.
Holding costs while renovating and marketing: property taxes, utilities, insurance, interest on borrowed money, maintenance, and HOA dues if applicable.
Flipper’s profit margin: the actual net profit the investor expects after all costs and risks.
Risk buffer for surprises: cost overruns, longer‑than‑expected holding periods, market softening, or lower‑than‑expected resale prices.

Analysis tools and banking education resources emphasize that the 70% rule’s core purpose is to build in a safety net for profit plus unexpected expenses, not to guarantee a specific profit amount.

When And Why To Adjust The 70% Rule

Experienced investors rarely treat 70% as a rigid law; they adjust the percentage based on the market, property type, and deal risk profile.

When You Might Use Less Than 70% (E.g., 60–65%)

Guides suggest lowering the percentage (e.g., to 65% or even lower) when:

The local market is not very competitive, so you can afford to make lower offers and still get deals accepted.
You are dealing with lower‑priced properties, where fixed costs and minimum profit requirements eat a bigger percentage of ARV.
You are uncertain about ARV or rehab costs and want a larger safety buffer.
You’re targeting heavy rehabs or properties with unusual risks (foundation issues, environmental concerns, legal complications).

Many investors and wholesalers report using 65% of ARV minus repairs (or even stricter) as a rule of thumb in these scenarios.

When You Might Use More Than 70% (E.g., 72–78%)

Some resources note that in hot, highly competitive markets, cash buyers may accept tighter margins and push offer limits up to around 75–78% of ARV, especially for clean properties in desirable areas.

You might nudge the rule upward when:

Inventory is very low, and good deals receive multiple offers quickly.
You’re working with higher‑priced properties, where even a slightly smaller percentage margin still translates into a substantial absolute profit.
You or your buyers are highly confident in ARV, repair estimates, and exit strategy (for example, pre‑sold or pre‑leased projects).

In these cases, a buyer might operate closer to, for example, 75% of ARV minus repairs, but they must understand they are trading away some safety margin.

How A Wholesaler Should Think About The Percentage

As a wholesaler, you are not forced to use the same percentage as your buyers, but you need to be in the same ballpark:

If most serious buyers in your market buy at 70% of ARV minus repairs, you must lock up deals at a lower effective percentage that leaves room for your fee.
If your market’s buyers routinely pay up to 75%, you may be able to structure deals at slightly higher MAOs while still collecting a fee, but your margin for error gets thinner.

Talk to active cash buyers and observe what they actually close on to calibrate your local percentage.

Numerical Example Of MAO For A Wholesale Deal

Suppose:

After Repair Value (ARV) estimated from good comps: $300,000.
Estimated repair costs from contractor walk‑throughs: $40,000.
Target investor percentage: 70%.
Your desired assignment fee: $15,000.

Step‑by‑step:

Investor max offer (70% rule):
- $300,000 × 0.70 = $210,000.
- $210,000 − $40,000 repairs = $170,000 investor max.
Wholesaler MAO:
- $170,000 − $15,000 wholesale fee = $155,000.

In this scenario, you would aim to get the property under contract at or below $155,000, then assign it to a flipper at $170,000, leaving them the standard 70%‑rule cushion.

Common MAO Mistakes That Kill Deals

New wholesalers often run into trouble by:

Basing MAO on inflated ARVs (often from active listings instead of sold comps), which leads to overpaying and deals that can’t be assigned.
Underestimating repair costs, especially bigger‑ticket items (roof, HVAC, foundation, plumbing), which eats up the 30% margin.
Ignoring holding and transaction costs, assuming that the 30% is “all profit” instead of a buffer covering multiple expense categories.
Copy‑pasting the 70% rule in markets where buyers operate at different margins, instead of checking what successful investors actually pay locally.

Using a combination of accurate comps, documented repair estimates, and realistic buyer feedback is the best way to make MAO a reliable decision tool instead of a guess.

How To Integrate The MAO Formula Into Your Workflow

To make MAO a repeatable part of your wholesaling operation:

Start every deal with a solid ARV estimate based on closed comps using the process from the comp analysis guide.
Get written repair estimates or at least itemized ballpark numbers for major systems from contractors or experienced rehabbers.
Decide on a market‑appropriate percentage (65%, 70%, 75%, etc.) based on your buyers’ real behavior and risk tolerance.
Clearly define your minimum profit per deal (wholesale fee) and stick to it unless there is a strategic reason to accept less.
Plug these into the MAO formula and only negotiate with sellers up to that maximum, not beyond it.

Used consistently, MAO becomes a guardrail that protects your business from emotional overpaying and helps you present transparent, numbers‑driven deals to your buyers.