Maximum Allowable Offer (MAO)

Maximum allowable offer (MAO) is the most an investor can pay for a property and still hit their required profit, classically calculated as 70% of ARV minus rehab costs.

Maximum allowable offer — MAO — is the most an investor can pay for a property and still hit their required profit. The classic formula is the 70% rule: MAO = (ARV × 0.70) − rehab costs. The 30% that comes off the top is not all profit; it covers the buyer's holding costs, closing costs, selling costs, and margin. Every serious cash buyer has a version of this number for every deal they look at, even if their exact percentage differs.

For wholesalers, MAO is really the buyer's number — and your contract price has to sit below it. Example: a house has an ARV of $200,000 and needs $35,000 of work. The buyer's MAO is $200,000 × 0.70 − $35,000 = $105,000. Contract the property at $95,000 and there is $10,000 of room for your assignment fee with the deal still working for the buyer. Contract at $104,000 and there is almost nothing left — for context, the average assignment fee on deals closed through Buy Box Cartel is $6,704, and that spread has to live between your price and the buyer's MAO.

What beginners get wrong: they run MAO with fantasy inputs. An inflated ARV or a guessed rehab number produces a precise-looking figure that is simply wrong, and buyers will re-run the math in minutes. The other mistake is offering MAO right away — MAO is your ceiling, not your opening offer. Start below it, leave room to negotiate, and walk away when the seller's floor is above your ceiling.