How to Calculate MAO for a Wholesale Deal: Aggressive vs. Conservative Offers

Two maximum allowable offer (MAO) calculations can produce different buying prices from the same deal assumptions. The difference comes from when you subtract the rehab budget.

The free GoGetter calculator compares both methods and checks a model total margin before choosing its rough estimate. Here is how to read the result—and what to verify before turning it into an offer.

Start with three assumptions

Enter your estimated after-repair value (ARV), rehab budget and buying percentage. ARV is the value you are assuming after the planned repairs. The buying percentage is your chosen input; the calculator starts at an editable 70%.

The result is an indicative buying price (BP), shown before a separate assignment-fee deduction. It is a screening number that still needs property-specific research and a complete cost review.

Compare aggressive and conservative buying prices

The calculator uses these formulas:

• Aggressive BP = (ARV − Rehab) × Buying percentage
• Conservative BP = (ARV × Buying percentage) − Rehab

In the aggressive method, the percentage is applied after deducting rehab. In the conservative method, the full rehab budget is deducted after applying the percentage to ARV.

For a positive rehab budget and a buying percentage below 100%, the aggressive result is higher. That label describes the calculation; it does not establish that the higher price is appropriate for a particular property.

A worked $300,000 ARV example

These figures are illustrative, rather than a real property analysis:

Aggressive: ($300,000 − $50,000) × 70% = $175,000

Conservative: ($300,000 × 70%) − $50,000 = $160,000

The $15,000 difference matters when discussing a potential acquisition. Neither result verifies the ARV, repair scope or buyer's actual costs.

Check the model total margin

GoGetter's model calculates total margin (TM) as:

TM = (92% × ARV) − Rehab − BP

For the aggressive result:

TM = ($300,000 × 92%) − $50,000 − $175,000 = $51,000

The margin guide compares TM with 15% of BP. Here, 15% of $175,000 is $26,250. The $51,000 model margin exceeds that amount, so the calculator uses the aggressive buying price. TM divided by BP is approximately 29.14%.

For comparison, the conservative result has a model TM of $66,000, or 41.25% of its $160,000 BP.

The 15% guide and 92% ARV factor are assumptions of this calculator, rather than universal industry standards. The margin percentage uses buying price as its denominator; it is not a percentage of ARV or a calculated return on invested cash.

If aggressive BP misses the guide, the calculator checks the conservative method. A warning appears when both methods miss it or a buying price is nonpositive. Revisit the assumptions before treating a failed screen as an offer.

Put evidence behind the ARV

Start with closed sales that compete with the subject property and reflect the condition you expect after the planned work. Compare location, property type, finished area, room count, lot characteristics and condition. Record the sale dates and explain meaningful differences.

Fannie Mae's comparable-sales guidance emphasizes relevant physical and legal characteristics and the same competitive market area. It also recognizes that the most appropriate comparable is not always the newest sale. Those are useful research principles when documenting an ARV assumption.

Use active and pending listings to understand current competition alongside the closed-sale evidence. Keep a source and date for your figures so another person can follow the analysis. Investigate conflicting property details before relying on them.

Build a complete cost review

A $50,000 rehab input is only useful when it represents a defined scope. Separate known work from unresolved items, obtain appropriate estimates and record the uncertainty around major systems, permits and the planned finish level.

Then review acquisition and resale expenses, financing charges, interest, holding time, taxes, insurance, utilities and any assignment fee. The calculator's fixed 92% factor does not itemize those expenses. Document what your assumptions cover and reconcile the actual costs, avoiding duplicate deductions.

The Consumer Financial Protection Bureau's cost explainer distinguishes upfront loan and closing costs from ongoing borrowing and ownership costs. Its mortgage examples are useful cost categories to check; use the actual terms and expenses of your transaction.

Model TM is not guaranteed net profit. Test a lower ARV, a higher rehab budget and a longer holding period before deciding what additional research a deal needs.

Try the calculation, then review the property

Open the free MAO calculator and enter your own assumptions. You can compare the two methods without creating an account.

For help with the evidence behind those inputs, request property research support. Work directly with Solomon M on comparable sales, ARV research, due diligence and deal analysis, with a quote based on the property and scope.