How to Analyze a Wholesale Deal: ARV, Rehab Estimates, and MAO
By Matthew Tavera ·
A deal sheet is a starting point, not a verdict. Learn what ARV, rehab, and MAO mean, run the math yourself, and know what to verify.
How to Calculate MAO: The 70% Rule in Central Florida
When you are looking at wholesale opportunities in Lakeland or Winter Haven, you will often hear investors discuss the 70% Rule. This is a foundational formula used to determine your Maximum Allowable Offer (MAO). The goal is to ensure you don't overpay for a property, leaving enough equity to cover your expenses and a reasonable profit margin.
The Basic Formula
To find your MAO using this guideline, follow this calculation: MAO = (After Repair Value × 0.70) – Estimated Rehab Costs
The remaining 30% isn't just "pure profit." It is designed to act as a buffer for:
- Buying Costs: Inspections, title insurance, and recording fees.
- Holding Costs: Property taxes (based on the Polk County tax cycle), insurance premiums, and utilities.
- Selling Costs: Commissions and closing credits if you intend to flip the property.
- Financing: Interest and points for hard money or private capital.
Local Factors for Lakeland Investors
While the 70% rule is a standard starting point, Central Florida’s unique landscape often requires you to adjust your percentages.
- Property Tax Cycles: Remember that Florida property taxes are assessed on January 1st. If you buy mid-year, you'll need to account for prorated taxes and the "Save Our Homes" cap reset, which can significantly increase the tax bill for a new owner after a sale.
- Hurricane Season Requirements: If the property needs a new roof or impact-resistant windows to meet current Florida Building Codes or to secure affordable homeowners insurance, these costs must be reflected in your rehab estimate before you apply the 70% multiplier.
- Market Nuances: In high-demand Lakeland neighborhoods like Lake Hollingsworth or Grasslands, some investors might use a "75% rule" because the exit velocity is higher. Conversely, in more rural parts of Polk County, you might stick closer to 65% to account for longer days on market.
Next Steps
Before making an offer based on a calculation, we recommend walking the property with a licensed contractor and reviewing the title history. If you are navigating a complex situation like a Polk County probate sale in Bartow, it is wise to consult with a qualified attorney to ensure the timeline fits your financing strategy.
Looking for a local perspective on a potential deal? Contact Tavera Legacy Investments LLC today for a no-pressure consultation on your next investment property.
| Line item | Example amount | Notes |
|---|---|---|
| After-repair value (ARV) | $250,000 | From your own comps |
| ARV × 70% | $175,000 | Rule-of-thumb percentage |
| Repair estimate | − $45,000 | Your contractor's number, with contingency |
| MAO (total purchase price) | $130,000 | Includes any assignment fee |
| Contract price + assignment fee offered | $122,000 + $10,000 = $132,000 | Total is $2,000 over MAO |
Run a full cost breakdown, not just the shortcut
The 70% rule is a quick filter. Before you commit, build a line-item budget:
- Purchase: contract price plus any assignment fee.
- Buying costs: title, settlement, recording, and lender fees. If you finance, Florida charges documentary stamp tax on the note ($0.35 per $100) and nonrecurring intangible tax on the mortgage (2 mills, or $0.002 per dollar).
- Repairs: contractor bids plus contingency.
- Holding costs: insurance, utilities, lawn care, interest, and property taxes for the months you hold.
- Selling or refinance costs: for a flip, sales commissions (if any), seller closing costs, and documentary stamp tax on the deed ($0.70 per $100 outside Miami-Dade, customarily paid by the seller in many Florida transactions, though the contract controls). For a BRRRR, refinance closing costs.
- Profit or equity target: the amount you need for the deal to be worth your time and risk.
What to check on the deal sheet itself
- Is the price the total? Confirm whether the assignment fee is included.
- Which comps support the ARV? Ask for addresses, then check them.
- What does the repair number cover? A "cosmetic" budget on a house that needs a roof is a warning sign.
- What is the closing timeline and deposit? A non-refundable deposit with a short timeline means your analysis has to happen first.
- Occupancy and access. Can you walk the property before you sign?
The bottom line
A good deal sheet makes it easy to check the numbers. Your own comps, contractor bids, and cost breakdown decide whether the deal works for you. For the legal side of buying from a wholesaler, see buying a wholesale deal in Florida.
For general education only. Not legal, tax, insurance, or financial advice. Laws, rates, and program rules change; verify current requirements with the official source or a qualified professional before relying on them. Information current as of October 2026.
Frequently asked questions
What is the 70% rule in real estate?
It is a rule of thumb for flips and wholesale deals: maximum allowable offer equals 70% of the after-repair value minus repair costs. It is a quick screen, not a full analysis, and your percentage should reflect your own costs and goals.
Does MAO include the wholesaler's assignment fee?
It should. Your MAO is the most you can pay in total, so compare it to the contract price plus the assignment fee.
Can I use the Property Appraiser's value as ARV?
No. Assessed and just values on the property appraiser's record are for tax purposes. Use recent comparable sales of renovated homes. The appraiser's site is still useful for confirming sale prices and dates.
How much contingency should I add to a rehab estimate?
There is no single right number. Many investors add a percentage contingency based on the age and condition of the property and how much was inspected. Older homes with original systems usually need more.
What closing costs should I include when analyzing a Florida deal?
Include title and settlement fees, recording fees, lender fees if you finance, Florida documentary stamp tax on any note ($0.35 per $100) and intangible tax on any mortgage (2 mills), plus your selling or refinance costs on the back end.