MAO Calculator

MAO formula keeps investor profit margin while accounting for rehab and selling costs.

ARV

Rehab cost

Margin % of ARV

Wholesale fee (if any)

MAO

$145,000

MAO % of ARV

0.6%

Max offer with margin

$145,000

How the math works

MAO = ARV − (ARV × margin %) − rehab − wholesale fee.

$250k × (1 − 30%) − $30k = $175k − $30k = $145k MAO = 58% of ARV.

How to Use

Enter arv.
Enter rehab cost.
Enter margin % of arv.
Enter wholesale fee (if any).
Read mao.

Frequently Asked Questions

MAO formula variants?

Standard fix-flip: ARV × 70% − repairs. BRRRR/buy-and-hold: ARV × 75% − repairs (refi captures capital). Wholesaling: ARV × 65% − repairs − assignment fee (need investor margin). Conservative markets: ARV × 65–70%. Aggressive markets: ARV × 75–80%. ARV must be conservative comp-supported. Repairs include: hard rehab + soft costs (perm, design, contingency), 15–25% buffer for surprises. MAO is offer ceiling, not target — start lower.

How does this debt analysis fit a workout strategy?

Workout, default, and recapitalization decisions depend on the gap between in-place debt and current asset value. Lenders evaluate cure cost, foreclosure timeline + cost, broker price opinion (BPO), and borrower equity. Borrowers evaluate equity in the property, refinance feasibility, and forbearance economics. This calculator provides one input to that multi-factor decision.

Discounted payoff (DPO) vs forbearance vs deed in lieu?

DPO: lender accepts less than full balance to avoid foreclosure cost, common with non-recourse and underwater assets. Forbearance: payment deferral 6–18 months, balance accrues, useful when value will recover. Deed in lieu: borrower transfers title to lender, faster than foreclosure but lender takes full risk. DPO often best when borrower has new capital + lender wants quick exit.

Special servicing dynamics?

CMBS loans transfer to special servicer at default or maturity default. Special servicer compensation aligns with workout, but timeline is 6–24 months and fees stack ($25–250k+ in costs). Whole-loan and balance-sheet lenders move faster but with less flexibility. Bridge and debt fund lenders most flexible. Time-to-resolution and total friction cost should be weighted in any borrower scenario.