function calculateWholesaleProfit() {
var arv = parseFloat(document.getElementById('arvInput').value);
var repairs = parseFloat(document.getElementById('repairInput').value);
var fee = parseFloat(document.getElementById('feeInput').value);
var rule = parseFloat(document.getElementById('ruleInput').value);
if (isNaN(arv) || isNaN(repairs) || isNaN(fee)) {
alert("Please enter valid numbers for ARV, Repairs, and Target Profit.");
return;
}
// Calculation Logic
// MAO = (ARV * Rule) – Repairs – Wholesale Fee
var rawMao = (arv * rule) – repairs – fee;
var endBuyerPrice = (arv * rule) – repairs;
var equityForBuyer = arv – endBuyerPrice – repairs;
// Update UI
document.getElementById('maoDisplay').innerText = "$" + rawMao.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyerPriceDisplay').innerText = "$" + endBuyerPrice.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('equityDisplay').innerText = "$" + equityForBuyer.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var recommendation = "";
if (rawMao <= 0) {
recommendation = "Warning: This deal does not leave enough margin for your target profit based on the selected rule.";
} else {
recommendation = "To earn a $" + fee.toLocaleString() + " assignment fee, your contract price with the seller should not exceed $" + rawMao.toLocaleString() + ".";
}
document.getElementById('recommendationText').innerText = recommendation;
document.getElementById('wholesaleResults').style.display = "block";
}
Understanding the Real Estate Wholesaling MAO Formula
Real estate wholesaling is a strategy where an investor (the wholesaler) signs a contract for a property and then assigns that contract to an end buyer (usually a fix-and-flip investor). To be successful, you must master the Maximum Allowable Offer (MAO) formula.
What is the 70% Rule?
The 70% rule is a guideline used by many real estate investors to ensure they leave enough "meat on the bone" for profit and unforeseen expenses. It suggests that an investor should pay no more than 70% of the After Repair Value (ARV), minus the costs of repairs.
The Formula: MAO = (ARV × 0.70) − Repairs − Your Assignment Fee
Key Terms Explained
ARV (After Repair Value): The estimated market value of the property after it has been fully renovated to modern standards.
Repair Costs: A detailed estimate of what it will cost to bring the property from its current condition to its ARV state.
Assignment Fee: This is your profit. It is the fee you charge the end buyer for finding the deal and securing the contract.
Equity for Buyer: The profit margin left for the rehabber after they buy the property from you and complete the repairs.
Wholesaling Profit Example
Let's say you find a distressed property with an ARV of $300,000. You estimate it needs $50,000 in repairs. You want to make a $10,000 assignment fee.
$300,000 (ARV) × 0.70 = $210,000
$210,000 – $50,000 (Repairs) = $160,000 (This is what your buyer will pay)
In this scenario, you must get the property under contract with the seller for $150,000 or less to secure your $10,000 profit while keeping the deal attractive for a cash buyer.
Pro Tip: In "hot" markets like Phoenix or Tampa, many investors use a 75% or 80% rule because competition is high and margins are tighter. In slower markets or for extremely high-risk properties, you might drop to a 60% or 65% rule.