How the 70% rule works
The 70% rule is a fast screen investors use so a deal leaves enough margin for repairs, holding and selling costs, and profit. You take the after-repair value (ARV), multiply by 70% (your rule percentage), then subtract the repair estimate. For wholesalers, subtract your assignment fee too - what's left is the most you can offer the seller and still hand a profitable deal to your end buyer.
It is a starting point, not gospel. In hot markets with thin inventory, experienced buyers stretch to 75–80%; on heavier rehabs or slower markets, tighten it. The two inputs that make or break the number are your comps (is the ARV real?) and your repair estimate (is it complete?). Get those right and the rule does its job.
Frequently asked questions
What is MAO in real estate?
MAO stands for Maximum Allowable Offer - the highest price you can pay for a property and still hit your target profit after repairs and costs. It keeps you from overpaying on an acquisition.
What is the 70% rule?
The 70% rule says an investor should pay no more than 70% of a property's after-repair value minus repair costs. It is a quick screen to protect margin, not a precise underwriting model.
Should wholesalers subtract their fee?
Yes. If you plan to assign the contract, subtract your wholesale fee from the MAO so the deal still pencils out for the cash buyer who ultimately closes it.