MAO
Wholesaling & Deal SourcingMAO (Maximum Allowable Offer) is the ceiling price an investor can pay for a property and still hit their target profit after renovation and sale. It is not what you want to pay — it’s the number you mathematically cannot exceed if the deal is going to work. Every dollar above MAO comes directly out of profit or turns a good deal into a break-even.
How it works. The standard MAO formula uses the “70% rule”: MAO = (ARV × 0.70) − estimated repair costs − wholesale fee (if applicable). The 30% haircut from ARV covers the buyer’s profit, holding costs, closing costs, and a margin of safety. A fix-and-flipper who buys at 70% of ARV minus repairs can sell at retail, pay commissions and closing costs, and still net a profit.
| Line item | Amount |
|---|---|
| ARV (comps-supported) | $300,000 |
| 70% of ARV | $210,000 |
| Estimated repairs | $40,000 |
| MAO (maximum offer) | $170,000 |
The 70% rule is a starting heuristic, not a law of nature. In expensive markets where spreads are thinner, investors may go to 75% or even 80%. In cheap markets where carrying costs are relatively higher, they may stay at 65%. The rule adjusts to your market — but the discipline of calculating a hard ceiling does not.
For a complete walkthrough — how to calculate ARV, estimate repairs, and derive a defensible MAO — see ARV, MAO, and repair estimates.