MAO = (ARV Ã Rule %) â Rehab Costs â Wholesale Assignment Fee
For example:
- ARV: $335,000
- End buyer rule: 72% ($241,200)
- Rehab estimate: $52,800
- Your assignment spread: $15,000
- MAO = $241,200 â $52,800 â $15,000 = $173,400
Property & Contract Terms
Fix & Flip Primary
After Repair Value (ARV) Comps
3 Comps
| Comp Address | SqFt | Sale Price | $/SqFt |
|---|
$
%
Rehab Scope & Construction
$31/sqft
%
$
Wholesale Assignment Spread
$
$
$
Max Allowable Offer (MAO)
$173,400
Ceiling for 72% Rule
Wholesale Assignment Spread
$20,400
Actual fee at current contract
Cash Buyer Purchase Price
$188,400
Contract + Assignment
End Buyer Projected Profit
$85,300
35.4% Projected ROI
Capital Waterfall Allocation (% of ARV)
$335,000 ARV
Seller Contract: $168,000
Assignment Fee: $20,400
Rehab Scope: $52,800
Holding/Closing: $8,500
Buyer Equity/Profit: $85,300
| After Repair Value (ARV) | Baseline from comps | $335,000 |
| Target Formula Rule (70% - 75%) | 72.0% x ARV | $241,200 |
| Less: Estimated Rehab & Contingency | - $52,800 | -$52,800 |
| Less: Wholesale Target Assignment | - Assignment Fee | -$15,000 |
| Maximum Allowable Offer (MAO to Seller) | Formula Max | $173,400 |
| Your Negotiated Seller Contract | Actual Purchase Contract | $168,000 |
| Cash Buyer Acquisition Cost | Contract + Wholesale Spread | $188,400 |
| Buyer Total All-In Basis | Purchase + Rehab + Holding Costs | $249,700 |
| Buyer Net Margin / Downside Buffer | ARV - All-In Basis | $85,300 (25.5%) |
CASH BUYER OFF-MARKET OPPORTUNITY
482 Oakwood Terrace SW - Prime Wholesale Assignment
3 Beds ⢠2 Baths ⢠1,650 SqFt ⢠Off-Market Atlanta, GA
Cash Buyer Price
$188,400
ARV
$335,000
Est. Rehab
$52,800
All-In Basis
$249,700
Projected Net Profit
$85,300
INVESTOR SUMMARY:
Direct-to-seller contract assignment. Property needs cosmetic/moderate updates (kitchen, bathrooms, flooring, interior/exterior paint, landscaping). Roof is in solid condition (approx 6 yrs old). Strong comps within 0.4 miles supporting $335k ARV.
Closing Date: 14 business days
Earnest Money Deposit (EMD): $3,000 non-refundable to Closing Attorney
Access: By appointment or lockbox code after POF verification.
How is the Maximum Allowable Offer (MAO) calculated?
The industry-standard wholesale acquisitions formula guarantees your cash buyer retains sufficient equity to absorb construction contingencies and financing while guaranteeing your assignment fee:
MAO = (ARV Ã Rule %) â Rehab Costs â Wholesale Assignment Fee
For example:
MAO = (ARV Ã Rule %) â Rehab Costs â Wholesale Assignment Fee
For example:
What is the difference between Fix & Flip buyers vs BRRRR Landlord buyers?
- Fix & Flip Buyers: Prioritize gross dollar profit and return on investment (ROI). They typically require a 15% to 25% net profit margin on the total ARV to justify financing costs, holding periods, and market risk.
- Buy & Hold / BRRRR Investors: Prioritize capitalization rate (NOI / Purchase Basis) and cash flow. They often purchase at slightly higher prices (up to 78% or 80% rule) if the gross market rents produce strong double-digit cash-on-cash yields.