MAO – Maximum Allowable Offer

[Joseph Scorese]

MAO Worksheet

Property Address:
ARV:
*Costs (30%):
Repairs:
MAO:
Starting MAO (-15%):

Formula: ARV – 30% – Repairs = MAO Terms:

ARV – After Repair Value.This number is derived from Comps, CMA's, and other appraisal tools.

Costs – These are the costs to get into (and sometimes out of) the property.The table below depicts the cost breakdown.

Costs are as follows:

Buying Costs(3%)

Carrying Costs(3%)

Closing Costs(3%)

Margin Of Error (1%)

Equity Or Profit (20%)

Repairs – These are the estimated repairs.Use the supplied Rehab Worksheet to get your initial estimate.

MAO – Maximum Allowable Offer. This is the theoretical maximum you can pay and NOT leave any of your money in the deal after refinancing.This is NOT a requirement to do a deal, however what is acceptable to leave in will be different for everyone depending on your own cash flow and financial ability.

Starting MAO – Get this number by subtracting another 15% from your MAO.This is a decent starting point to begin your negotiations.If you get no counter offers at starting MAO, you will need to increase your initial offer.Market conditions will always impact starting MAO.