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Business Development

"How Much Should I Pay?" (Know Your MAO)

This is Jp Moses here to give you a few easy formulas for understanding numbers when flipping houses. When you’re in the fix and flip market, you buy a house, fix it up, sell it, and then hopefully, before it’s all over, you make a good profit.

The only way to make this happen, and make it happen repeatedly, is to create a relatively simple math formula. That way, whenever you look at a deal, you’ll be able to quickly analyze it to make sure you're buying it for the right price.

In other words, you’ll know the MAO: maximum allowable offer.

Playing the Numbers

When creating your formula, the first number you need to know is the ARV, or the After Repair Value. This refers to the approximate price the home should sell for once it’s fixed up.

Next you’ll have the buy price. The amount you’ll pay for the property.

After that, the number that is needed is the cost…


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