Published July 1, 2026 · Arizona Real Estate Wholesaling Team
If you've spent any time around wholesalers or real estate investors, you've probably heard the terms "ARV" and "MAO" thrown around. These two numbers are the backbone of how most wholesale and investment offers get calculated, and understanding them can help both sellers and new investors make sense of why an offer looks the way it does. Let's break each term down, walk through the common formula used to calculate an offer, and run through a full numeric example.
ARV stands for After Repair Value — the estimated market value of a property once it has been fully repaired and updated to a condition comparable to similar, recently sold homes in the area. ARV is not the price the home would sell for today, as-is; it's an estimate of what a fully renovated version of the same home would be worth on the retail market. Investors and wholesalers typically estimate ARV by researching recently sold, comparable homes ("comps") nearby that are similar in size, age, and condition to what the subject property would look like after repairs.
MAO stands for Maximum Allowable Offer — the highest price an investor or wholesaler can reasonably pay for a property and still make their intended profit margin after accounting for repair costs, holding costs, selling costs, and their own return. In other words, MAO answers the question: "What's the most I can pay for this house and still make it a good deal after I fix it up and resell it (or after someone else does)?" Offers on distressed or as-is properties are frequently built around a version of the MAO calculation, which is why cash offers on homes needing significant work are often lower than a home's eventual fully-renovated resale value — the difference reflects repair costs, carrying costs, and profit margin, not simply a lowball number.
A common shorthand many wholesalers and investors use to estimate MAO is known as the "70% rule." The formula looks like this:
MAO = (ARV × 0.70) − Estimated Repairs
The idea behind the 70% rule is that an investor generally does not want to tie up more than about 70% of a property's after-repair value in the purchase price and repair costs combined, leaving roughly 30% of ARV to cover selling costs, holding costs (like utilities, insurance, and loan interest while the property is being renovated), unexpected expenses, and profit. This is a simplified rule of thumb rather than a precise formula — actual numbers can vary based on the specific market, the investor's business model, financing costs, and how competitive the local market is for deals — but it gives sellers and new investors a useful starting point for understanding how offers are typically built.
Let's walk through a simple, realistic example using round numbers:
In this example, the Maximum Allowable Offer would be approximately $135,000. That is the price point at which an investor would generally expect the deal to still leave enough margin, after the $40,000 in repairs and the built-in 30% cushion for selling costs, holding costs, and profit, to make the project worthwhile.
Wholesalers rely on ARV and MAO because these numbers let them quickly evaluate whether a potential deal is likely to be attractive to the investors on their buyers list. When a wholesaler contracts with a seller at or below the MAO (leaving room for their own assignment fee within that number), it means the end investor buyer can still hit their target margin after paying the assignment fee, repairing the property, and reselling or renting it out. This is also why wholesalers ask detailed questions about a property's condition upfront — accurate repair estimates are just as important to the math as an accurate ARV.
Understanding ARV and MAO can help sellers make sense of a cash offer rather than assuming it's arbitrary. A cash offer on a home that needs significant work will typically be well below the home's fully-renovated ARV, because the buyer is pricing in the repair costs, time, and risk of renovating and reselling the property themselves. Sellers who understand this math can better evaluate whether an offer is reasonable given the property's condition and ask informed questions about how repair estimates were calculated.
Want to run your own numbers on a property you're evaluating? Try our MAO calculator for a quick estimate, or join our buyers list to see real Arizona wholesale deals with ARV, repair estimates, and assignment fees already laid out.
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