Applicability: United States investment planning; amounts are in USD. Editorial review: 2026-09-25. The fictional calculations below are educational assumptions, not property valuations.
Outcome
Use the free Maximum Allowable Offer calculator to compare three purchase ceilings and identify which assumptions need evidence before you negotiate.
Before you begin
Prepare an after-repair value, rehabilitation budget and margin amount. Keep notes on the expected condition at resale, the scope of work, the valuation date and the costs you intend the discount factor to cover.
The calculator uses your figures. It does not research comparable sales, quote repairs or establish a lender's valuation. You can calculate without an account; saving a private snapshot requires a verified account.
Practical steps
- Open Maximum Allowable Offer. Enter After-repair value (USD) for the condition you expect after completing the work.
- Enter Rehabilitation budget (USD), including the contingency you have chosen to put in that estimate.
- Enter Assignment / margin fee (USD). This is one subtraction in the simple calculator. Record what that amount represents so you do not also subtract it elsewhere.
- Set Scenario 1 factor, Scenario 2 factor and Scenario 3 factor. The example defaults are 65%, 70% and 75%; choose factors appropriate to your own cost assumptions.
- Choose Calculate scenarios and compare the Purchase ceiling at each factor. The formula is ARV × discount factor − rehabilitation − margin.
- Use Name this result to describe the property, assumptions and date. Choose Save result, or Create a free account to save, to keep a private snapshot.
Worked example
For a fictional renovation, enter ARV $300,000, rehabilitation $40,000 and margin $20,000. At 70%, the calculation is $210,000 − $40,000 − $20,000 = $150,000. Factors of 65% and 75% produce $135,000 and $165,000.
Now suppose your supported resale estimate falls to $280,000. At 70%, the ceiling becomes $136,000 with the other inputs unchanged. A $20,000 reduction in ARV has reduced this purchase ceiling by $14,000. Save a separately named snapshot if you want to keep both assumptions for comparison.
How to interpret it
A purchase ceiling is the result of the inputs, not proof that the property is worth that price. The factor is not a universal market rule. Decide how acquisition, financing, holding and selling costs are represented in your factor and margin; the tool does not supply separate estimates for those costs.
Do not subtract the same expense in rehabilitation, margin and the discount factor. If a negative ceiling appears, these assumptions do not support a positive purchase price. Discounted ARV is rounded down to the whole cent.
The three calculator factors are separate from the Downside, Base and Upside analysis in an investment research report. Neither a higher factor nor a favorable result verifies title, condition or permitted use.
Common problems
- Input rejected: enter non-negative dollar amounts with up to two decimal places and percentages from 0 to 100. Enter numbers without currency symbols.
- Uncertain ARV: compare explicit assumptions and note why they differ; do not describe an asking price as a verified closed sale.
- Changed figures but old result: choose Calculate scenarios again after editing, then save the new snapshot.
- Saved result mistaken for a report: a snapshot keeps arithmetic. Creating property research requires a separate brief and confirmation.
Next action
Read Interpret market evidence to assess the resale assumption. Then use Save a scenario and read your report to connect the calculation to property research.