70% rule: max offer = 70% × ARV − rehab. Adjust the rule to your market and risk.
Calculation details
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What does this calculator estimate?
Maximum allowable offer (MAO) is the most a fix-and-flip investor should pay for a property, derived from ARV and rehab cost — most commonly via the 70% rule (70% of ARV minus rehab). Enter ARV, rehab, holding costs, and desired profit to see the ceiling.
- 70% rule: MAO = 0.70 × ARV − rehab
- Profit-based: MAO = ARV − rehab − holding − profit
- Protects your profit from day one
How the 70% rule works
The 70% rule is the flipper's guardrail: never pay more than 70% of the after-repair value minus the rehab cost. The 30% margin absorbs selling costs, holding, surprises, and the profit. It's blunt but keeps beginners from overpaying.
Limitations to watch for
The 70% is a starting point, not a law — adjust for your actual selling costs, holding timeline, and market. The profit-target version does the math from your required profit. Both depend on a realistic ARV.
How to use it in practice
Estimate the ARV carefully (use the ARV calculator), total the rehab with contingency, and run both rules. Offer at or below the MAO — walk away if the seller won't meet it. There's always another deal.
['Enter the ARV and rehab estimate.', 'Enter holding costs and target profit.', 'Read the maximum allowable offer.']
What MAO is
Maximum allowable offer is the most a flipper should pay for a property: ARV × target percentage − rehab − holding − selling costs − profit. The calculator assembles the full deal math from your targets.
The 70 percent rule in context
The classic screen: MAO = ARV × 0.70 − rehab. On a $300,000 ARV with $50,000 rehab, that's $160,000. The rule leaves room for profit and surprises — the calculator lets you set the target percentage to your market.
Every cost layer matters
Beyond purchase and rehab: holding costs (interest, taxes, insurance, utilities) accrue monthly, and selling costs (commission, closing) typically run 6–8 percent of the sale. Forgetting them turns a 'good deal' into a loss.
A worked example
ARV $320,000, 70% target, $60,000 rehab, $10,000 holding, $20,000 selling costs, $25,000 desired profit: MAO = 224,000 − 60,000 − 10,000 − 20,000 − 25,000 = $109,000. The calculator returns the number and shows each line.
MAO is a screen, not a verdict
The number is only as good as the ARV and rehab estimates. Overestimating ARV by 10 percent can erase the entire profit. The calculator makes the math transparent; the comp research decides whether the math is real.
How this calculator works
Formula
MAO = ARV × 70% − rehab costs (the 70% rule), or ARV − rehab − holding − target profit. It's the max you can pay and still profit.
Worked example
With $290,000 ARV and $40,000 rehab: MAO = $290,000 × 0.70 − $40,000 = $163,000.
Assumptions to verify
- The ARV is realistic.
- Rehab includes contingency.
- The target profit is achievable in your market.
Frequently asked questions
What is the maximum allowable offer?
The top price that still leaves a profit: ARV × 70% − rehab = $290k × 0.7 − $40k = $163k.
What is the 70% rule?
Buy at ≤70% of ARV minus rehab — the 30% buffer covers costs and profit.
How is the profit-target version different?
It backs out your exact target: ARV − rehab − holding − profit = max offer.
Why do flippers use it?
It prevents overpaying — the #1 way flips lose money.
What if the seller won't accept?
Walk away — the deal fails the math, and there will be others.
Do I adjust the 70%?
Yes — high-cost markets may need 65%; low-cost ones can go higher. Know your actual costs.
What if my rehab estimate is wrong?
Add a 10–20% contingency to the rehab before computing the MAO.
What is maximum allowable offer?
The most a flipper should pay: ARV × target% − rehab − holding − selling − profit.
What costs go into MAO?
Rehab, holding, selling costs, and your target profit — all subtracted from the ARV-based ceiling.
Why does ARV accuracy matter?
A 10% ARV error can erase the entire profit — the estimate is the fragile input.
Cite this tool
BoringToolsKit. “Maximum Allowable Offer Calculator.” boringtoolskit.com/maximum-allowable-offer-calculator/ (reviewed 2026-08-25). Free to reference in articles, syllabi, and answer posts with a link.
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