Calculate your Maximum Allowable Offer for wholesaling and flipping.
Maximum Allowable Offer (MAO)
$0.00
After Repair Value (ARV):$0
Investor Discount (70%):$0
Less: Repairs:-$0
Less: Closing/Holding:-$0
Less: Your Profit/Fee:-$0
Offer Limit:$0
function calculateMAO() {
// 1. Get Input Values
var arvInput = document.getElementById('mao_arv').value;
var repairsInput = document.getElementById('mao_repairs').value;
var profitInput = document.getElementById('mao_profit').value;
var closingInput = document.getElementById('mao_closing').value;
var ruleInput = document.getElementById('mao_rule').value;
// 2. Parse and Validate
var arv = parseFloat(arvInput);
var repairs = parseFloat(repairsInput) || 0;
var profit = parseFloat(profitInput) || 0;
var closing = parseFloat(closingInput) || 0;
var rule = parseFloat(ruleInput) || 70;
if (isNaN(arv) || arv <= 0) {
alert("Please enter a valid After Repair Value (ARV).");
return;
}
// 3. Logic: MAO = (ARV * (Rule/100)) – Repairs – Closing – Profit
var discountFactor = rule / 100;
var valueAfterDiscount = arv * discountFactor;
var mao = valueAfterDiscount – repairs – closing – profit;
// 4. Formatting Helper
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
// 5. Update DOM
document.getElementById('mao_result_container').style.display = 'block';
document.getElementById('mao_final_display').innerHTML = formatter.format(mao);
// Update Breakdown
document.getElementById('display_arv').innerHTML = formatter.format(arv);
document.getElementById('display_rule_val').innerHTML = rule;
document.getElementById('display_discounted_value').innerHTML = formatter.format(valueAfterDiscount);
document.getElementById('display_repairs').innerHTML = "-" + formatter.format(repairs);
document.getElementById('display_closing').innerHTML = "-" + formatter.format(closing);
document.getElementById('display_profit').innerHTML = "-" + formatter.format(profit);
document.getElementById('display_total').innerHTML = formatter.format(mao);
}
Understanding the Maximum Allowable Offer (MAO)
In the competitive world of real estate investing, specifically wholesaling and house flipping, precision is the key to profitability. The Maximum Allowable Offer (MAO) is the ceiling price an investor can pay for a property while still ensuring a specific profit margin and covering all associated costs.
Using an MAO calculator helps remove emotion from the buying process. It relies on strict mathematical formulas to determine if a deal is financially viable or if it presents too high a risk.
The MAO Formula Explained
While there are variations depending on the investor's strategy, the core formula used by most fix-and-flip investors is:
ARV (After Repair Value): The estimated market value of the property after all renovations are completed. This is usually determined by looking at "comps" (comparable sales) in the neighborhood.
Rule % (The 70% Rule): A standard rule of thumb where investors will not pay more than 70% of the ARV minus repairs. This 30% buffer accounts for the investor's profit, holding costs, and safety margin. In hot markets, this might rise to 75% or 80%.
Repairs: The total estimated cost of materials and labor required to bring the property up to market standards.
Closing & Holding Costs: Expenses incurred while buying, selling, and holding the property (taxes, insurance, utilities, loan interest).
Desired Profit: For wholesalers, this is the assignment fee. For flippers, this is the net profit target.
How to Use This Calculator
To get an accurate MAO, you need to do your homework before entering the numbers:
Determine the ARV: Research recently sold homes in the area that are renovated. If a renovated home sold for $300,000, that is your ARV.
Estimate Repairs: Be realistic. If the house needs a new roof, kitchen, and floors, verify construction costs in your local market. Underestimating repairs is the #1 reason investors lose money.
Select Your Rule Percentage: If you are a wholesaler selling to a cash buyer, they will typically expect a deal at 70% of ARV. If you are flipping it yourself in a competitive market, you might adjust this to 75%.
Input Your Profit: If you are wholesaling, enter your assignment fee (e.g., $10,000). If you are flipping, enter your target profit.
Example Scenario
Let's say you find a distressed property. Renovated homes in the area sell for $200,000 (ARV). You estimate it needs $40,000 in repairs. You want to make a $10,000 wholesale fee.
Using the standard 70% rule:
$200,000 × 0.70 = $140,000
$140,000 – $40,000 (Repairs) = $100,000
$100,000 – $10,000 (Your Fee) = $90,000
Your Maximum Allowable Offer to the seller is $90,000. If you pay more than this, you eat into the end buyer's profit margin, making the deal difficult to sell.