Metrics
Maximum Allowable Offer (MAO)
The highest price you should pay to still hit your target cap rate, cash-on-cash, and cash flow thresholds.
How it's calculated
MAO = work backward from your target metrics (target cap rate, target CoC) given the property's NOI and your financing assumptions.Example
A property with $32,000 NOI at your target 7.5% cap rate has MAO = $32,000 ÷ 0.075 = $426,666.
Why Maximum Allowable Offer (MAO) matters
MAO gives you a hard ceiling for negotiation. You go into the offer conversation knowing 'anything above $X breaks my model' — way more powerful than haggling without a number.
Related terms
Cap Rate
Net Operating Income ÷ property value. The unleveraged return a property generates, independent of f…
Cash-on-Cash Return
Annual cash flow ÷ total cash invested (down payment + closing + rehab). Tells you how hard your mon…
Deal Score
A 0–100 composite of cap rate, cash-on-cash, monthly cash flow, and DSCR. Use it to triage deals in …