Published July 1, 2026 · Arizona Real Estate Wholesaling Team
If you've read our earlier article on ARV and MAO Explained, you already know the basic definitions and the single-scenario walkthrough. This article goes a level deeper: where the 70% rule actually comes from, why it's shaped the way it is, and — most usefully — three different worked scenarios showing how the same formula produces very different offers depending on a property's ARV and repair needs.
The 70% rule isn't a law or a precise scientific formula — it's a rule of thumb that evolved out of decades of fix-and-flip and wholesale investing experience. The logic behind it is straightforward: an investor who buys a distressed property needs to account for more than just the purchase price and repair costs. They also need to cover holding costs (loan interest, insurance, utilities, property taxes while the home is vacant and being worked on), selling costs (agent commissions if they list it retail, or their own marketing costs), closing costs on both ends, the risk of repair cost overruns, and — the whole point of taking on the project — a real profit margin. Industry experience over many market cycles settled on roughly 30% of ARV as a reasonable cushion to cover all of that, which is where the "70%" comes from: pay no more than 70% of ARV, minus repairs.
It's worth being clear that 70% is a starting heuristic, not a fixed rule every investor follows exactly. In highly competitive markets, some investors compress their margin closer to 75–80% of ARV minus repairs, accepting a thinner cushion in exchange for winning more deals. In riskier markets, or on properties with major unknowns (like older homes with unclear plumbing or electrical), some investors push their target well below 70% to protect against surprises. The formula is a framework for thinking clearly, not a number to follow blindly.
MAO = (ARV × 0.70) − Estimated Repairs
For wholesalers specifically, the assignment fee is then subtracted from MAO to determine the actual number that gets offered to the seller, since the wholesaler is compensated for finding and contracting the deal rather than doing the repairs themselves:
Offer to Seller = MAO − Assignment Fee
ARV: $300,000. Repairs (paint, flooring, minor updates): $20,000.
MAO = ($300,000 × 0.70) − $20,000 = $210,000 − $20,000 = $190,000. With a $10,000 assignment fee, the offer to the seller would be $180,000 — about 60% of ARV, reflecting how little work the property needs.
ARV: $300,000. Repairs (kitchen and bath updates, roof, some systems work): $60,000.
MAO = ($300,000 × 0.70) − $60,000 = $210,000 − $60,000 = $150,000. With the same $10,000 assignment fee, the offer to the seller would be $140,000 — notice how much more the repair number moved the offer compared to Scenario 1, even though ARV didn't change at all.
ARV: $300,000. Repairs (structural work, full systems replacement, extensive updates): $110,000.
MAO = ($300,000 × 0.70) − $110,000 = $210,000 − $110,000 = $100,000. With a $10,000 assignment fee, the offer to the seller would be $90,000 — just 30% of ARV, reflecting the significant investment required to bring the property up to a sellable, fully-renovated condition.
Holding ARV constant across all three scenarios makes the point clearly: the single biggest variable moving a wholesale offer up or down is usually the repair estimate, not the ARV. This is exactly why an accurate, honest repair walkthrough (ideally backed by an actual contractor estimate on larger jobs) matters so much — a repair number that's off by $20,000–$30,000 can single-handedly turn a good deal into a bad one, or vice versa. It's also why sellers sometimes feel an offer seems "too low" without understanding that the gap between ARV and offer price is doing real work covering repairs the seller may not have fully accounted for themselves.
Rather than working through the math by hand, you can run any ARV and repair scenario instantly using our MAO calculator, which uses this exact formula and flags whether a resulting offer looks like a good deal, a tight one, or one that doesn't work, based on where the offer lands relative to ARV.
For the original explainer covering ARV definitions and a single worked example, see ARV and MAO Explained. To see real Arizona deals with this math already worked out, join our buyers list.
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