BiggerPockets Wholesale Calculator MAO Calculations Formula Help

[Terrance Harrington]

As a newbie real estate investor I believe that the tools offered on BiggerPockets are Awesome. However, I'm very analytical and I like to understand how to perform the calculations by hand. I have been trying to figure out how the Wholesale Calculator is calculating the MAO. I've tried using the following formula: MAO = [ARV] – [Flipper’s Profit] – [Repair Costs] – [Fixed Costs] – [Wholesale Fee], however my calculations are much different than what the calculator calculates as the rental owners purchase price.

Here are the numbers that I'm using:

After Repair Value = $150,000

Desired Wholesale Profit = $5,000

Cash Buyer's Desired Cash on Cash Return = 12%

Loan Amount = $100,000

Loan Interest Rate = 5%

Amortized = 30 years

Purchase Closing Cost = $3,500

Total Gross Monthly Rent = $1,800

Other Monthly Income = $50

Property Taxes = $1,350

Monthly Insurance = $45

Vacancy Rate = 8%

Repairs = 8%

Cap Ex = 5%

Property Mgmt = 10%

So based on these numbers I'm calculating $150,000 - $18,000 (12% COC) - $25,000 - (not sure what's considered fixed cost) - $5,000 = $102,000 but the calculators states that my MAO is $124,767.84. 

Help, what am I doing wrong???

[Ben Millar]

Terrence, where did you get the "Fixed Costs". Per the calculator, it looks like the estimated repairs are $25,000? Is it possible you mixed up the term "Fixed Costs" with "cost to fix". The MAO formula for fix and flips is considered to be: MAO = (70% X ARV) - Repair Costs. You can obviously make this more detailed: MAO = ARV - Your Profit - Commissions (6%) - Holding Costs (utilities, insurance, taxes, interest). You can always dig deeper. But this model is for generally for fix and flips.

The evaluation methodology is different for buy and holds.  I would evaluate based on potential cash flow.