What Is Maximum Allowable Offer?

Also written as: MAO

MAO is the highest price an investor should pay for a fix-and-flip property to hit their target profit, calculated from the after-repair value, renovation costs, and desired margin.

Most useful for: Real Estate Investor · Fix-and-Flip Investor

At a Glance

Maximum Allowable Offer

MAO=(ARV × Target Rule %)−Rehab Cost

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Using the 70% rule on a $310,000 ARV with $40,000 in rehab costs: MAO = ($310,000 × 0.70) − $40,000 = $177,000.

Formula

MAO = (ARV \times Target Rule %) - Rehab Cost

MAO = (ARV × Target Rule %) − Rehab Cost

Example

Using the 70% rule on a $310,000 ARV with $40,000 in rehab costs: MAO = ($310,000 × 0.70) − $40,000 = $177,000.

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This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.

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