Underwriting
MAO (Maximum Allowable Offer)
The highest price an investor can pay for a property and still hit their target profit.
Definition
MAO is the output of an underwriting calculation — either the 70% rule or a profit-based method. It represents the most a flipper, BRRRR investor, or wholesaler can pay for a property without eroding their profit margin. Serious investors treat the MAO as a hard ceiling and walk away from any deal that requires them to offer above it.
Example
70% rule MAO on a $240K ARV with $35K rehab: ($240K × 0.70) − $35K = $133K. Offer above $133K and the deal no longer pencils.
Related terms
ARV (After Repair Value)
The price a property will sell for once all renovations are complete, established from rec…
70% Rule
A quick underwriting shortcut: pay no more than 70% of ARV minus rehab cost.
Wholesale Real Estate
The practice of contracting a distressed property at a discount and assigning the contract…
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