Tyson Smith breaks down how to calculate Maximum Allowable Offer for wholesale real estate. Don't use a flat percentage of ARV. Instead, estimate resale price, then subtract listing costs, closing costs, repairs, and buyer profit to find what you can actually pay.
You do not use a certain percentage of ARV to figure out your MAO. That's like super beginner stuff. When you're trying to calculate your MAO, you need to figure out what can I sell this property for or what could somebody else sell this property for? And then you back out all the costs associated with getting the property to sell for that price. So how much is it going to cost when they list that property on the market? How much is it going to cost when they pay the closing costs from you? How much is it going to cost when they do make the repairs to the property? Are they going to leave any money in the deal for them to make money? Right. You back out all of those costs and that's how you get to your MAO.
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