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MAO: Rental

When your buyer is a landlord, the rent drives the offer, not the resale price, and a landlord's lender has to say yes too.

The most honest number in real estate.

When your buyer is a landlord, the rent drives the offer, not the resale price, and a landlord's lender has to say yes too. The Rental MAO works out the most a landlord can pay all-in based on the rent, operating costs and what a lender will lend, then takes out your fee. Your offer is built to close, your buyer gets a deal they can finance, and your fee is built in. Everybody eats.

Why it matters

  • An offer a lender can say yes to. The lender's coverage ratio caps the loan, so your number reflects what a real loan will support.
  • More deals in more areas. Where a flip doesn't pencil, a rental often does, so you have another buyer to call.
  • Your fee stays inside the deal. Like the Flip MAO, your fee comes out of the ceiling, not on top.

Steps

  1. In the Deal calculator, scroll to the MAO form and choose Rental.
  2. Fill in the property and rehab details the same way as the Flip form: ARV, square footage, condition, repairs and add-ons.
  3. Under THE RENT, enter Monthly rent, or use Use this rent in Pull the real numbers to fill it from the rent you trust.
  4. Check Variable opex (default 23% of rent: management, maintenance, CapEx, vacancy) and Fixed opex (default 17%: taxes, insurance, HOA).
  5. Under FINANCING, check DSCR (default 1.25), Rate (default 7.5%), LTV (default 75%) and Amortisation (default 30 yr).
  6. Enter Your assignment fee and, optionally, the price you'd pay the seller.
  7. Read your maximum offer and walk through it in The MAO explained.

Good to know

  • The math: Rent − opex = NOI. The lender's coverage ratio (DSCR) caps the loan. The loan divided by LTV is the most a landlord can pay all-in. Subtract repairs, closing and holding to get the ceiling, then subtract your fee for your maximum offer.
  • There's no buyer's profit field. The landlord's return comes from the rent.
  • A higher LTV can lower the offer, because the same loan divided by a bigger LTV means a smaller all-in price.
  • Defaults are listed above, but your account settings may differ. Go by what's shown on your screen.
  • No offer showing? Check the boxes first. If a required field is empty, especially ARV, rent or your assignment fee, there's no offer yet. A fee of $0 is fine, but an empty fee isn't. Once everything is filled in, an MAO of zero or below means the rent and financing don't support this exit.
  • Nothing here is saved. If you might make an offer, save the property.

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