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Lesson 4 of 15

MAO (Maximum Allowable Offer)

The most important number in wholesaling - the highest price you can pay and still make money.

What is MAO?

Maximum Allowable Offer (MAO) is the highest price you can pay for a property while still leaving room for your profit AND your buyer's profit.

The MAO Formula

MAO = (ARV × 70%) - Repairs - Your Fee

ARV

After Repair Value from comps

70%

Industry standard rule

Repairs

Estimated rehab costs

Your Fee

Assignment fee ($8K-$15K)

Real Example - San Antonio Property

ARV (from comps): $320,000
× 70%: $224,000
- Repairs: -$35,000
- Your assignment fee: -$10,000
YOUR MAO: $179,000

This means you should offer no more than $179,000 to make this deal work.

Why MAO Matters

Protects Your Buyer

Flippers need room to make money. Pay too much = no buyers for your deal.

Protects Your Fee

Build in your assignment fee upfront - don't hope for profit later.

Creates Certainty

Know your ceiling before negotiations start. No emotional decisions.

Builds Reputation

Accurate MAOs = deals that close = buyers who trust you.

Pro Tips

  • 1. Start at 65% in hot markets where buyers are competing
  • 2. Go to 75% for landlord buyers who need less margin
  • 3. Add 15% contingency to repairs for older homes
  • 4. Your assignment fee is NOT negotiable - build it in

Key Takeaway

MAO is your walk-away number. Never go above it no matter how motivated the seller seems. Discipline with MAO = profitable deals.

Practice MAO Calculations

Use our Smart Calculator with San Antonio repair costs

Open Calculator
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