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ARV & Flipping

Calculate your Maximum Allowable Offer (MAO) for a fix-and-flip from ARV, repairs, holding costs and target profit, vs. the 70% rule.

✓ Tested formula & cited sources Checked against independent sources · Oct 18, 2026 Private: runs in your browser

Estimated market value of the property after all repairs are completed

Total cost of all renovations, repairs, and upgrades

Carrying costs during the flip: loan interest, property taxes, insurance, utilities, etc.

Your desired profit as a percentage of the ARV (sale price), e.g. 20% of a $300,000 ARV = $60,000 (typical: 15-25%)

Results

Maximum Allowable Offer (MAO)

$175,000

This is a ceiling, not a target offer — it's what keeps your 20% margin intact after repairs and holding costs. The 70% rule (roughly $160,000 here) is a rougher gut-check some investors use; treat both as starting points and verify repair estimates before committing.

Max Offer (detailed)
$175,000
Estimated Profit at MAO
$60,000
Return on Investment (ROI)
25.0%
70% Rule Value
$160,000
After Repair Value (ARV)
$300,000
Total Project Costs
$240,000

The formula

MAO = (ARV × (1 − Target Profit%)) − Repair Costs − Holding Costs

ARV
After Repair Value
MAO
Maximum Allowable Offer
70% Rule
70% Rule

Worked example — After Repair Value (ARV) 300000, Estimated Repair Costs 50000, Holding Costs (closing, taxes, insurance, utilities) 15000, Target Profit Margin 20 %

Maximum Allowable Offer (MAO) = $175,000

Full explanation ↓

How ARV & Flipping Works

MAO = (ARV × (1 − Target Profit%)) − Repair Costs − Holding Costs

The Maximum Allowable Offer (MAO) is the most you can pay for a property and still hit your target profit margin. The 70% Rule is a quick shorthand: ARV × 0.70 − repairs. If your MAO is above the 70% rule number, you are paying a premium. The MAO formula works backward from the expected sale price (ARV), deducts your desired profit percentage first (so you guarantee your margin), then subtracts all the costs you will incur to complete the project.

What remains is the maximum you can pay for the property.

ARV
After Repair Value — The estimated market value of the property after all renovations are complete. This is always an estimate — use comparable sales (comps) from the same neighborhood within the last 3-6 months.
MAO
Maximum Allowable Offer — The highest price you can pay for the property to achieve your target profit margin. Always negotiate toward a number below your MAO — this is your walk-away price, not your opening offer.
70% Rule
70% Rule — A quick guideline: never pay more than 70% of ARV minus repair costs. Helps avoid overpaying. The remaining 30% covers your profit, holding costs, closing costs, and transaction fees.
The MAO formula works backward from the expected sale price to determine the most you can pay for a fixer-upper while still hitting your profit target

Understanding the Result

House flipping is about buying right. The MAO formula ensures you account for all costs plus your desired profit before making an offer. The 70% Rule is a quick industry heuristic — it assumes 30% of the ARV covers your profit, holding costs, and transaction fees. If your calculated MAO is below the 70% Rule number, you have a conservative deal. If it is above, you are either accepting thinner margins or the market demands it.

Successful flippers typically analyze dozens of properties for every one they buy, using the MAO formula as a gatekeeper to ensure they never overpay. The most common mistake new flippers make is underestimating repair costs — always add a 10-20% contingency buffer to your initial repair estimate. The second most common mistake is overestimating the ARV by using the most optimistic comparable sale rather than a conservative average.

How to Use

  1. Enter the After Repair Value (ARV) — the estimated sale price after renovations. Research comparable sold properties in the same neighborhood.
  2. Enter your estimated repair and renovation costs. Get contractor bids before making an offer — do not rely on rough estimates.
  3. Enter holding costs: loan interest, property taxes, insurance, utilities during the flip period. A typical flip takes 3-6 months.
  4. Set your target profit as a percentage of the ARV (the sale price). Most investors target 15-25% minimum. The ROI shown is profit divided by your total project cost, so it will be higher than this margin.
  5. The calculator shows your MAO, estimated profit, and ROI. Compare against the 70% Rule as a sanity check on your numbers.

Frequently Asked Questions

What is the 70% Rule in house flipping?
The 70% Rule states that you should pay no more than 70% of the After Repair Value (ARV) minus repair costs. Example: ARV = $300K, repairs = $50K → max offer = $300K × 0.70 − $50K = $160K. The remaining 30% accounts for your profit, holding costs, and closing costs. The rule is a guideline, not a hard limit — in hot markets, you may need to go above 70%, which means accepting a lower profit margin or relying on appreciation to make up the difference. In slow markets, aim for 65% or lower.
What are typical holding costs for a flip?
Holding costs include: loan interest (hard money or conventional), property taxes, insurance, utilities (electric, water, gas), HOA fees, and lawn maintenance. For a 3-6 month flip, the total depends on the purchase price, loan terms and how long the project runs. Hard money loans are particularly expensive — 10-15% interest — which is why experienced flippers prioritize speed and often use cash or conventional financing when possible.
What is a good profit margin for a flip?
Most experienced flippers target a minimum 15-20% ROI on their total project cost. Beginners should aim higher (20-25%) to account for unexpected overruns. The rule of thumb: if you are not making at least $30K-$50K per flip, it might not be worth the risk and effort. Also consider your return on a per-hour basis — a $40K profit on a flip that consumed 300 hours of your time is $133/hour, which is excellent. The same profit on a flip that consumed 1,000 hours is only $40/hour.

Common Uses

  • •Calculate the maximum offer price for a fixer-upper property while ensuring your target profit margin is achieved after all renovation costs.
  • •Apply the 70 percent rule as a quick sanity check to avoid overpaying on potential house flipping investments.
  • •Compare multiple deal opportunities by analyzing the projected ROI for each property before making an offer.

Sources

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Cite this calculator

TheCalcUniverse. "ARV & House Flipping Calculator — MAO & 70% Rule." TheCalcUniverse, 2026, https://thecalcuniverse.com/finance/arv-flipping-calculator/. Accessed October 25, 2026.

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