Calculate Maximum Allowable Offer using the 70% rule: (ARV x 70%) - repairs. Check asking price vs MAO, gross margin, and compare 65-80% discount scenarios.
📍 Property Address (optional)
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InputsYour Numbers
Deal Parameters
After-Repair Value (ARV)?
$
Estimated Repair Costs?
$
Discount % (default 70%)?
%
Assignment Fee (if wholesale)?
$
Asking Price / Current Offer?
$
Pro Forma (Alternative Discount %)
Alternative Discount %?
%
As-Is AnalysisCurrent
Enter values to see results
Maximum Allowable Offer
--
at your discount %
Deal Status
--
vs asking price
Asking vs MAO
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room to negotiate
Implied Margin
--
at asking price
70% Rule Calculation
After-Repair Value (ARV)--
Discount Applied--
ARV x Discount %--
Less: Repair Costs--
Less: Assignment Fee--
Maximum Allowable Offer (MAO)--
Deal Analysis vs Asking Price
MAO (maximum offer)--
Asking / Current Offer--
Spread (MAO - Asking)--
Gross Margin at MAO--
Gross Margin at Asking--
Pro FormaAfter Plan
Enter pro forma values
Alt. Discount MAO
--
at alt % rule
MAO Difference
--
vs base rule
65% MAO
--
tightest underwriting
80% MAO
--
loosest underwriting
MAO at Various Discount Rates
65% Rule MAO--
70% Rule MAO (standard)--
75% Rule MAO (buy & hold)--
80% Rule MAO--
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1
Enter ARV First
ARV is the starting point for the 70% rule. All other numbers flow from it. Get solid comps before trusting your ARV.
2
Add Your Repair Budget
The 70% rule subtracts repairs to ensure you don't overpay even after renovation costs. Be conservative -- rehab always runs over.
3
Understand the 30% Buffer
The 30% buffer covers: selling costs (6-8%), holding costs (5-8%), financing costs (3-5%), profit (10-15%), and a contingency cushion. If costs are lower, you can use 75%.
4
Check Against Asking Price
Enter the seller's asking price to see instantly whether the deal works. If asking is above MAO, you need to either negotiate down or walk away.
5
Use 75% for Buy-and-Hold
You don't need the full flip profit margin for buy-and-hold deals. 75% of ARV minus repairs is often sufficient for a BRRRR or hold strategy.
6
The MAO Table Shows Your Range
The pro forma shows MAO at 65%, 70%, 75%, and 80% discount. Use 65% if you're concerned about the ARV, 75-80% only if you have a signed contract to refinance or sell.
The 70% Rule is the standard formula for calculating Maximum Allowable Offer (MAO) in fix-and-flip and wholesale investing: MAO = (ARV × 70%) - Repair Costs.
Why 70%? The remaining 30% covers selling costs (commissions + closing = 7-8%), holding costs during rehab (5-8%), financing costs (3-5%), and leaves a gross profit margin of ~12-15%. That's why the rule works: it builds in enough buffer for real-world costs while leaving profit.
Adjusting the rule: use 65% in competitive markets where rehab overruns or sales delays are common. Use 75% for buy-and-hold (BRRRR) where you don't need the full flip margin. Use 80% only in exceptional circumstances with very high confidence in the ARV.