What is MAO in real estate?

Your Maximum Allowable Offer: the most you can pay for a property and still hit your profit after repairs and costs.

What is the MAO formula?

MAO = ARV × a percentage − repairs − your fee. Flippers usually use 70%. Wholesalers use the same number and take their fee out of it.

Is the 70% rule still accurate?

It is a starting point, not a law. In expensive markets many investors work at 75 to 80%. In cheaper ones, 60 to 65%. The calculator lets you change it.

How do you calculate MAO for a rental or BRRRR?

Keep your all-in cost (price plus repairs) at or under what the refinance will lend, often around 75% of ARV, and check that the rent covers the payment.

Does MAO apply to subject-to or seller-finance deals?

Less directly. There the question is whether the rent covers the payment (PITI) with room to spare, more than the purchase price.

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Free MAO Calculator

Know your Maximum Allowable Offer before you pick up the phone. Wholesale, fix & flip, or BRRRR, based on ARV, repairs, and your fee.

Enter your numbers to see your Maximum Allowable Offer.

DealRoute runs this automatically on every lead, so you never have to open a calculator again.

How the MAO formula works

Your Maximum Allowable Offer is the most you can pay for a property and still leave enough margin for your end buyer's profit, repairs, and your fee. The standard formula:

MAO = (ARV × percentage) − Repairs − Your Fee

Wholesale — leave the buyer their 70% spread, then subtract your assignment fee. That's the number you contract at.
Fix & flip — the classic 70% rule. You're the end buyer, so the full spread is yours to cover holding, closing, and profit.
BRRRR — keep your all-in cost at or below 75% of ARV so you can refinance most of your capital back out.

The two silent killers of every deal are optimistic ARV and lowballed repairs. Be conservative on both — it's far cheaper to pass on a marginal deal than to be wrong on the one you do.

Pre-foreclosure and distressed deals add factors a vanilla calculator misses — payoff and reinstatement figures, junior liens, and your state's redemption period. Those change the real number. DealRoute models them automatically.

MAO formula, worked through

Say the house will be worth $250,000 once it is fixed (ARV) and needs $40,000 of work.

Fix and flip (70% rule): $250,000 × 70% = $175,000, minus $40,000 repairs = $135,000. That is the most you pay.
Wholesale: the same $135,000 is your end buyer's ceiling. Take your $10,000 fee out and you contract at $125,000.
BRRRR: most lenders refinance at around 75% of the appraised value, so $250,000 × 75% = $187,500 for the purchase and repairs together. Take out the $40,000 of repairs and the most you pay for the house is $147,500, if you want most of your cash back out.

MAO questions, answered

What is MAO in real estate?: Your Maximum Allowable Offer: the most you can pay for a property and still hit your profit after repairs and costs.
What is the MAO formula?: MAO = ARV × a percentage − repairs − your fee. Flippers usually use 70%. Wholesalers use the same number and take their fee out of it.
Is the 70% rule still accurate?: It is a starting point, not a law. In expensive markets many investors work at 75 to 80%. In cheaper ones, 60 to 65%. The calculator lets you change it.
How do you calculate MAO for a rental or BRRRR?: Keep your all-in cost (price plus repairs) at or under what the refinance will lend, often around 75% of ARV, and check that the rent covers the payment.
Does MAO apply to subject-to or seller-finance deals?: Less directly. There the question is whether the rent covers the payment (PITI) with room to spare, more than the purchase price.

This calculator is the small version of what DealRoute does all day.

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