MAO Calculator

Protect your margins. Calculate the Maximum Allowable Offer for any potential flip using the industry-standard 70% rule to ensure profitability.

What the home will sell for after renovations are complete.
70% is standard; 65% for higher risk/safety.
Max Allowable Offer (MAO)
$200,000

Do not offer more than this amount.

Potential Profit
$105,000
Safety Margin
30%

What is the 70% Rule?

I genuinely believe that you make your money when you *buy*, not when you sell. The 70% rule is a guideline used by real estate investors to ensure they leave enough room for closing costs, carrying costs, and profit. It suggests that you should never pay more than 70% of the After Repair Value (ARV) minus the repair costs.

The Breakdown:

  • ARV: The projected resale price based on "comps" (comparable sold homes) in the neighborhood.
  • The 30% Gap: This covers your holding costs (interest, taxes), selling costs (realtor commissions), and of course, your profit.
  • Repair Costs: Your detailed estimate for materials and labor to bring the home up to market standards.

When to break the rule:

  • High-End Markets: In very competitive, high-appreciation areas, investors sometimes use a 75% or 80% rule because the profit margins per deal are larger in dollar amounts.
  • Rental focus: If you plan to "BRRRR" (Buy, Rehab, Rent, Refinance, Repeat), you might be more flexible with the initial offer price.