What is the maximum allowable offer (MAO) and why it is crucial to know it for wholesaling? Learn the answer here.
- Hey guys, welcome back to the course. … Earlier we started off with the ARV, the after repair value. … In this lecture, we're going to go over … the MAO or the maximum allowable offer. … And why they're both really important … when you're looking at a wholesaling deal. … If we think of the ARV … as the starting point in your analysis, … we can think of the MAO … as the ending point for your analysis. … That is, we want to always start with the ARV, … when it comes to the analysis. … And then work our way to arriving at the MAO. … Now there are some steps in the middle … that we'll cover when we go over the formula … that all wholesaling investors use. … But first, what is the MAO? … As the name might suggest, … this is the most that you should offer … for a deal on a property. … When you do this right and you have an MAO that is accurate, … you can then always confidently make offer on deals … and know that if you get your deal, … you're going to be in good shape. … Get this wrong, however, …
- Name the formula used to calculate the MAO from the AVR.
- Summarize the 70% rule.
- Differentiate between the rehab estimator, ARV, and MAO calculator worksheets.
- Describe the factors in an AVR estimate.
- Cite the formulas that are helpful when pitching to a flip investor buyer.
- Explain the difference between recently sold comps and rental comps.