Max Allowable Offer (MAO) $245,500 Contract ceiling for safety
Buyer Purchase Price $260,500 MAO + Assignment Spread
Est. Total Rehab $42,500 $22.97 / sq ft
End-Buyer Projected Profit $133,500 31.2% Total ROI

Capital Allocation Waterfall

ARV 100% Breakdown
ARV Baseline $445,000
Target Rule Deduct -$133,500
Total Rehab Cost -$42,500
Wholesale Assignment -$15,000
Closing / Holding buffer -$8,500
MAO (Lock-In Price) $245,500

Copy this formatted memorandum directly into email blasts, text dispo groups, or investor CRM channels:

All-In Basis for Buyer

$311,500

Purchase + Rehab + Closing

Net Cash on Cash Return

42.8%

Assuming 100% Cash / Hard Money

Spread Cushion

$133,500

Safety equity before loss point

Assignment Fee Contract Acquisition Price Buyer Dispo Price Buyer Net Flip Profit Buyer ROI

The 70% Real Estate Rule

Standard wholesale real estate underwriting relies on the core formula: MAO = (ARV × 70%) − Estimated Repairs − Assignment Fee − Closing/Holding Costs. The 30% discount leaves adequate room for cash buyers to finance the acquisition, endure unforeseen holding duration, pay resale commissions, and achieve a healthy net profit margin.

Rehab Scoping Accuracy

Accurately segmenting cosmetic versus structural capital expenditures (CapEx) separates successful wholesalers from failed contracts. Ensure your scope accounts for roof age, HVAC serial dates, and city permit delays before setting the contract ceiling.

Disposition Liquidity

Clean dispo memorandums that clearly state square footage comps, realistic rehab estimates, and clear title closing timelines experience significantly faster assignment execution and fewer contract cancellations.