MAO calculator (70% rule)
Work out the most you can offer on a fix and flip or wholesale deal. Free, no sign up, and nothing you type leaves your browser.
Calculate your maximum allowable offer
The formula
MAO = ARV × 70% − repairs − assignment fee
The maximum allowable offer is the most you can pay for a property and still leave room for profit and costs. The 70% rule caps your all in price (purchase plus repairs) at 70% of the after repair value, leaving 30% of ARV for profit, holding, financing, closing and selling costs. Wholesalers subtract their assignment fee too, because the end buyer still needs the deal to work at 70%.
Worked example
| After repair value | $200,000 |
|---|---|
| × 70% | $140,000 |
| − Estimated repairs | $35,000 |
| − Assignment fee | $10,000 |
| Maximum allowable offer | $95,000 |
If the seller will not go below $95,000, the deal does not meet the 70% rule at these numbers. Either the repairs are lower than you think, the ARV is higher, or it is not the deal.
Getting the inputs right
- ARV should come from recent sales of similar, renovated homes nearby, not from the list price.
- Repairs move MAO dollar for dollar, so a $10,000 miss in the rehab budget is a $10,000 overpayment. Price the whole scope, including items that are easy to forget: permits, dumpsters, and systems you could not inspect.
- The percentage is a rule of thumb, not a law. Adjust it for your market and your real holding and selling costs.
Common questions
What is the 70% rule in real estate?
The 70% rule says an investor should pay no more than 70% of a property's after repair value (ARV), minus the repair costs. The remaining 30% of ARV is meant to cover profit, holding costs, financing, closing and selling costs. Wholesalers also subtract their assignment fee.
How do you calculate maximum allowable offer (MAO)?
MAO = ARV x 70% - estimated repairs - assignment fee. For a house with a $200,000 ARV, $35,000 of repairs and a $10,000 fee, MAO is $200,000 x 70% = $140,000, minus $35,000 and $10,000, which is $95,000.
Is 70% always the right percentage?
No. It is a rule of thumb. Investors often use a lower percentage, such as 60 to 65%, for low priced houses, heavy rehabs or slow markets, where fixed costs eat a bigger share of the deal. In higher priced markets some use 75 to 80%, because the same dollar profit is a smaller share of ARV. Run your actual holding and selling costs before relying on any percentage.
Where does the repair number come from?
MAO is only as good as the repair estimate. You can use a contractor walkthrough, your own scope, or Estimara, which estimates repair costs room by room from property photos. Treat any estimate as a planning number until a contractor confirms it.
Estimara estimates the repair number from property photos and runs this same calculation inside the app. See how it works or the rehab labor cost index for how local labor prices vary.
Try it on a property you already know. Estimara is free to download and includes a limited number of free analyses.