How to Use This Calculator
- 1
Enter Property & Rehab Details
Input the average price per sqft from comparable sales, subject property square footage, estimated rehab costs, and MAO rule percentage (commonly 70%). Optionally expand 'Manual ARV Override' to enter your own ARV estimate.
- 2
Review Your Results
The calculator displays ARV, Maximum Allowable Offer, Projected Profit, Equity Captured %, Rehab as % of ARV, and Deal Viability. The Insights card shows investment return (ROI), rehab analysis, and negotiation range.
Example Calculation
A real estate investor evaluates a 1,800 sqft fix-and-flip property using local comps at $150/sqft with $45,000 in rehab costs.
Avg Price per Sqft (Comps)
$150/sqft
Subject Property Sqft
1,800 sqft
Rehab Costs
$45,000
MAO Rule
70%
Results
After Repair Value
$270,000
Maximum Allowable Offer
$144,000
Projected Profit at MAO
$81,000
Equity Captured at MAO
46.7%
Rehab as % of ARV
16.7%
Deal Viability
Viable deal
Insights card shows 42.
Tips
Thoroughly Research Comparables
ARV accuracy depends on comps. Use properties sold within 3-6 months, within 0.5 miles, with similar size and condition. In the example, a $10/sqft error in comps changes ARV by $18,000 — shifting MAO by $12,600 and profit by $5,400.
Budget Rehab Contingency
Add 10-15% contingency to rehab estimates. In the example, $45,000 rehab + 15% contingency = $51,750, which reduces MAO to $137,250 and profit to $81,000. Even with the buffer, this deal remains viable at 16.7% rehab-to-ARV.
Adjust the 70% Rule to Market
The 70% rule works for standard flips, but adjust to market conditions. Hot markets may support 75% ($157,500 MAO, $67,500 profit). Slow markets need 65% ($130,500 MAO, $94,500 profit but harder to find deals). The example's 46.7% equity capture provides strong downside protection.
The After Repair Value (ARV) Calculator estimates a property's post-renovation market value and determines your maximum offer.
With $150/sqft comps on a 1,800 sqft property, the ARV is $270,000.
Using the 70% rule with $45,000 in rehab, the Maximum Allowable Offer is $144,000 — yielding $81,000 projected profit (30% of ARV) and 46.7% equity capture.
Total investment of $189,000 delivers a 42.9% ROI.
Calculating ARV and Maximum Offer
The ARV is derived from comparable sales, then used to calculate the Maximum Allowable Offer using an investor rule (typically 70%).
ARV = Avg Price per Sqft (Comps) x Subject Property Sqft
MAO = ARV x (MAO Rule / 100) - Rehab Costs
Projected Profit = ARV - Rehab Costs - MAO
Equity Captured = ((ARV - MAO) / ARV) x 100
Rehab % of ARV = (Rehab Costs / ARV) x 100
The 70% rule reserves 30% of ARV for holding costs (5-10%), selling costs (8-10%), and profit.
Adjust the percentage based on market conditions and your risk tolerance.
Worked Example: Evaluating a Fix-and-Flip Opportunity
An investor evaluates a distressed property using local comparable sales.
Inputs:
- Avg Price per Sqft (Comps): $150/sqft
- Subject Property Sqft: 1,800 sqft
- Rehab Costs: $45,000
- MAO Rule: 70%
Step-by-step:
- ARV: $150 x 1,800 = $270,000
- MAO: $270,000 x 70% - $45,000 = $189,000 - $45,000 = $144,000
- Projected Profit: $270,000 - $45,000 - $144,000 = $81,000 (30.0% of ARV)
- Equity Captured: ($270,000 - $144,000) / $270,000 = 46.7%
- Rehab % of ARV: $45,000 / $270,000 = 16.7% (moderate rehab)
- Total Investment: $144,000 + $45,000 = $189,000 → 42.9% ROI
At $25/sqft rehab cost and 46.7% equity capture, this deal has strong margins with room to absorb unexpected costs.
When to Adjust the 70% Rule
The 70% rule is a guideline, not gospel.
Adjust based on market conditions:
- Hot/appreciating markets (75-80%): Higher MAO acceptable when values are rising. At 75%, the example's MAO becomes $157,500 with $67,500 profit — less margin but still viable if you expect 5%+ appreciation during the hold period.
- Standard markets (70%): The sweet spot for most flips. The example's $81,000 profit at $144,000 purchase provides a 42.9% ROI with strong downside protection.
- Slow/declining markets (60-65%): More conservative to protect against value drops. At 65%, MAO = $130,500 with $94,500 profit potential — but finding sellers at this price is harder.
- Luxury/unique properties: Standard rules may not apply. Longer hold times, higher carrying costs, and smaller buyer pools require deeper margins (55-65%).
Frequently Asked Questions
How is After Repair Value (ARV) calculated from comparables?
ARV = Average Price per Sqft from Comps x Subject Property Sqft. In the example, $150/sqft x 1,800 sqft = $270,000. Use recently sold (3-6 months), nearby (0.5 miles), similar-condition properties for comps. If you have an independent appraisal or your own estimate, use the Manual ARV Override to enter it directly.
How does the 70% rule determine the Maximum Allowable Offer?
MAO = ARV x 70% - Rehab Costs. In the example: $270,000 x 70% - $45,000 = $189,000 - $45,000 = $144,000. The 30% margin covers holding costs (~5-10% of ARV), selling costs (~8-10%), and profit. At $144,000 purchase + $45,000 rehab = $189,000 total investment, the projected $81,000 profit represents a 42.9% ROI.
What is a good equity capture percentage for a flip?
Aim for 30%+ equity captured at MAO for a strong safety buffer. In the example, 46.7% equity ($126,000 between MAO and ARV) provides excellent protection against market dips, rehab overruns, or extended holding periods. Below 20% equity is risky — a 10% market correction could eliminate your profit margin entirely.