How to Find the MAO Formula Easy and Fast!
If you’re a new real estate investor, the task of coming up with an offer to present to the seller is probably a little bit intimidating.
You may fear that you’re going to offer too much and not be able to sell the property. Or Maybe you’re afraid to get punched in the nose when you come out with a “low-ball” offer. Never fear!
Finding the real estate wholesale formula is easier than you think. It’s a simple formula that you can memorize in 2 minutes. The downside is that you usually need a calculator to find the mao formula relatively quickly. UNTIL NOW.
The MAO Cheat Sheet / ARV Calculator
You can download this super cool maximum allowable offer CHEAT SHEET!! You can download it, keep it on your iPad, or in your pocket (if you’re still a dinosaur) and whip it out when you’re trying to find MAO quickly.
There’s a simple formula on how to calculate maximum allowable offers (also called MAO – and pronounced “mayo”). Typically, we take the After Repaired Value (a.k.a. ARV) and multiply it by 70% and then subtract the estimated repairs. Since finding the maximum allowable offer is an art and not a science, then your MAO may be slightly different then someone else’s MAO.
This may also be known to some real estate wholesalers as the rule of 70.
Different MAO Calculators
The reason your wholesaling houses formula may be different than your BUYER’s MAO, is for 2 reasons.
1.You may estimate repairs at $10,000 – and your fellow investor may estimate them at $15,000.00, causing your formula to be different.
2. You may determine that ARV is $200,000, and your fellow investor may determine that ARV is $195,000.00
When the MAO Formula Changes
The real estate market is constantly changing. The market conditions will affect the formula that you’re using for your real estate wholesaling formula.
The COVID-19 Pandemic changed things in a big way within the real estate market. Real Estate buyers and out of the woodwork and started a buying frenzy. It doesn’t seem like this is a reasonable reaction to a pandemic, but it’s what is happening.
An abundance of buyers and a shortage of inventory creates a seller’s market. In a hot seller’s market, your rule of 70 may change. The end users (rehabbers) are willing to pay more for a property than they have in the past. They feel that is safe to do this knowing that the value of properties is increasing at a rapid pace. Your mao formula could easily change from 65% of ARV to 80% or 85% of ARV.
Watch this video and find out how to calculate MAO
FREE MAO CHEAT SHEET
Download the Free MAO Cheat Sheet that you can carry in your pocket or car, and never pay too much for a property again!