How to calculate MAO for a wholesale deal

Step by step

1. 1

   Estimate the after-repair value (ARV)

   Pull 3–5 renovated sold comps from the last 3–6 months near the property, average their price per square foot and multiply by the subject's square footage. ARV sets the ceiling for everything else, including how much your buyer's lender will lend.

2. 2

   Build the repair budget

   Itemize the big items — roof, mechanicals, kitchen, baths, flooring, paint — or start with a per-square-foot estimate for the rehab level. Add a 10–20% contingency. Buyers will walk the property and price repairs themselves, so be realistic.

3. 3

   Add your buyer's holding costs

   Multiply monthly taxes, insurance, utilities and HOA dues by the expected hold — rehab time plus time to sell, often 4–8 months.

4. 4

   Add closing and selling costs

   Include your buyer's purchase closing costs (often 1–3% of price) and their resale costs: agent commissions, concessions, title and transfer taxes (often 6–9% of ARV).

5. 5

   Add financing costs

   Most end buyers use a hard-money or private lender. Include interest for the hold, origination points and lender fees. Remember loans are capped at a percentage of ARV, which affects how much cash your buyer needs.

6. 6

   Subtract the buyer's profit and your fee

   Flippers typically want 10–20% of ARV in profit after all costs. What's left after subtracting every cost and the buyer's profit is the most the buyer can pay. Subtract your assignment fee and you have your MAO.

7. 7

   Sanity-check against the 70% rule

   Compare your detailed MAO with ARV × 70% − repairs − fee. If they differ by more than about 10% of ARV, recheck your ARV, repairs and cost assumptions before you make an offer.

Worked example

A house with an ARV of $300,000 needs $49,500 of repairs including a 10% contingency. Your end buyer wants a 15% profit, finances the purchase with a hard-money loan at 90% of purchase and 100% of rehab (11% interest-only, 2 points), and holds for 6 months. You want a $10,000 fee.

The 70% rule gives $150,500 for the same deal — close to the detailed figure here, but the gap widens quickly at higher interest rates, longer holds or very low and very high price points. With financing, your buyer's loan is about $195,269 and they need roughly $24,841 at closing.

Why your buyer's financing belongs in MAO

Most end buyers aren't paying cash. Their lender's leverage, rate, points and ARV cap determine both their costs and how much cash they need. If you price deals as if every buyer were all-cash, you'll overestimate what buyers can pay and lose assignments at the closing table. Jaken Finance Group funds fix-and-flips up to 100% of total cost on qualified deals — see how wholesale deal financing works or read our end-buyer financing guide.

Frequently asked questions