MAO, or Maximum Allowable Offer, is the highest price a wholesaler or investor can pay for a property and still make the deal profitable. It's derived from the ARV and estimated repair costs using the 70% rule.
The 30% buffer covers: closing costs (2–4%), holding costs (2–5% annualized), selling costs (6–8%), unexpected repairs (~5%), and the buyer's profit margin. The 70% rule has been the industry standard because it provides enough cushion to survive cost overruns while still leaving room for profit.
MAO is your ceiling. If the seller's asking price is above your MAO, the deal doesn't work — unless you can renegotiate or your repair estimate is conservative. Never confuse MAO with your opening offer; lead with a lower number and negotiate up.
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