A MAO calculator is a simple tool that tells you the most you can pay for a property and still walk away with a profit. MAO stands for Maximum Allowable Offer.
You plug in a few numbers: the value after repairs, your fix-up budget, your costs, and your target profit. The calculator returns a ceiling. Offer above it and you're betting on luck. Offer at or below it and the math works.
Real estate investors use a MAO calculator on every deal to set a maximum purchase price before they make an offer. This guide breaks down the MAO formula, walks through the calculation step by step, and shows real deals so you can run the numbers on your next investment property.
The Maximum Allowable Offer is the highest price you can pay for a property and still hit your profit goal. The base formula is short:
MAO = After Repair Value − Repair Costs − Fixed Costs − Desired Profit
After Repair Value (ARV): What the property will be worth once it's fully fixed and move-in ready. You pull this from recent sales of similar homes nearby.
Repair costs: Everything it takes to bring the house to that after-repair condition. Roof, HVAC, kitchen, paint, the works.
Fixed costs: The non-repair expenses of doing the deal. Closing costs, holding costs, and for wholesalers, your assignment fee.
Desired profit: The minimum spread you want for taking on the risk and the work. No profit target, no deal.
Say a house will be worth $300,000 fixed up. It needs $50,000 in repairs. You budget $20,000 for closing and holding, and you want $40,000 in profit.
So $190,000 is your ceiling on this deal. Pay more and you're cutting into the profit you set out to make.
The 70% rule is a shortcut version of the MAO formula. It says:
MAO = (ARV × 0.70) − Repair Costs
The 0.70 bakes in a 30% cushion that's meant to cover your fixed costs and your profit in one move. So instead of itemizing closing, holding, and profit separately, you let the 30% do the work.
Run the same house through it:
MAO = ($300,000 × 0.70) − $50,000 = $160,000
Lower the percentage to be more conservative, raise it to be more aggressive. The rule exists to keep you from overpaying into a deal that never pays.
When you want more precision than the 70% rule gives, you break the costs out one by one. A common wholesaler version looks like this:
MAO = (ARV × 0.70) − Repair Costs − Assignment Fee
Here are the cost factors that move your number:
Calculating MAO is a seven-step sequence. Here's how each step works.
Pull three to five comparable recent sales of finished homes nearby. This number anchors everything else.
Multiply ARV by 0.70. The 30% you set aside is your safety margin against surprises.
Price big systems first (roof, HVAC, foundation), then finishes. Contractor bids beat guesses.
Title, escrow, transfer taxes, recording fees. Use local rates — they're easy to forget.
Taxes, insurance, utilities, and loan interest for every month you expect to hold.
Decide your minimum before you run the number, then hold the line.
What's left is your ceiling and opening position — not a fixed price.
The fastest way to trust the formula is to watch it run on real numbers. Below are three scenarios: a fix and flip, a wholesale deal, and the same property in a hot market versus a slow one.
Comps say the house is worth $250,000 renovated. You budget $45,000 for rehab, $18,000 for closing and selling, $9,000 for six months of holding, and a $40,000 profit.
Tip: run both the 70% shortcut and the full breakdown on every deal. If they land far apart, your fixed-cost or profit assumptions need a second look.
A wholesale deal works the same way, with one extra subtraction: your assignment fee. You're locking up a contract and selling it to an end buyer. The offer has to leave room for their profit and yours.
MAO = (ARV × 0.70) − Rehab Costs − Assignment Fee
Say a property has an ARV of $200,000, needs $40,000 in rehab, and you want a $15,000 fee.
If you don't want to itemize, a quick proxy is to estimate soft costs (closing plus holding) at 10% to 15% of ARV and subtract that.
MAO calculations shift between a competitive market and a slow one, because the percentage you apply to ARV isn't fixed. In a hot market you stretch higher to beat other buyers. In a slow market you pull back to protect yourself.
In a hot market, investors often run 75% to 80% of ARV to stay in the running. In a slow market, many drop to 65% or lower to leave more cushion. Same house, very different offer.
| Competitive Market | Slow Market | |
|---|---|---|
| ARV percentage | 75% to 80% | 65% or lower |
| ARV | $250,000 | $250,000 |
| Applied percentage | 78% | 65% |
| Less rehab | −$45,000 | −$45,000 |
| Maximum offer | $150,000 | $117,500 |
Your MAO is shaped by ARV, repair costs, closing costs, holding period, desired profit, and the state of the market. The 70% rule is a handy default, but these factors are why it bends.
Lean on recent comps and appraisals. Overstate ARV and offers look generous but lose money.
Use contractor bids and inspections, then add a 10% to 20% contingency buffer.
Title fees, commissions, transfer taxes, and legal fees add up across both ends of the deal.
Taxes, insurance, utilities, lender fees, and interest all run during the project.
Set it realistically for the work and the risk. A thin margin on a heavy rehab is how investors lose money.
Hot markets may force a higher percentage of ARV. Slow markets let you offer less.
The most common MAO mistakes come from the person at the keyboard, not the tool.
Whatever you pick needs core inputs: ARV, repair costs, holding costs, closing costs, desired profit, and a wholesaler's assignment fee. Accuracy in those fields beats a slick interface.
Look for customizable fields, transparent formulas, the ability to adjust the percentage for local markets, and clear documentation. If you can't tell how it reached the number, don't trust the number.
Setting the MAO is the start, not the finish. Once you have a number, the work is staying organized: tracking every lead and offer, following up, watching your KPIs, signing fast, and keeping your outreach in one place.
A good MAO keeps you from overpaying. Good systems keep you from losing the deals your MAO qualifies.
If you want the offer math, the pipeline, the follow-up, and the outreach in one place, a platform built for investors like REsimpli brings them together.
REsimpli includes a built-in deal calculator on each lead that runs ARV and the 70% rule against auto-pulled property data — so your MAO pulls from real lead data instead of fields you retype.
Get started with REsimpli and run your next deal with the numbers and the workflow on your side.
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