A maximum allowable offer is not a rule of thumb — it is the price at which every cost of the flip, plus your profit, still fits inside the exit value. In California, renovated comparables typically clear around $840,000, a cosmetic-plus-mechanical rehab runs about $125,000, and holding costs of $3,350 per month compound while the work is done. The tool below computes the offer those numbers support, solving percentage-based closing costs out of the equation the way experienced California wholesalers actually do it.
California flip assumptions
| Median home value | $762,000 |
|---|---|
| ARV assumption (110% of median)Renovated comps typically price above the median | $840,000 |
| Rehab budget (15% of ARV)Plus a 10% contingency in the model | $125,000 |
| Selling costsAgent commission, transfer taxes, and concessions ≈ $67,200 on this ARV | 8.0% |
| Holding costs per monthInterest, taxes, insurance, utilities, security | $3,350 |
Home values: Zillow, September 2026. Income, rent, and property tax: U.S. Census Bureau ACS, 2024. Insurance is an estimate. Sources · How every state compares
The maximum offer a California flip supports
| ARV | $840,000 |
|---|---|
| Total rehab (budget + 10% contingency) | $137,500 |
| Holding costs (6 months) | $20,100 |
| Selling costs at exit | $67,200 |
| Purchase closing costs (2% of offer) | $10,416 |
| Target profit (10% of ARV) | $84,000 |
| Maximum allowable offerHeadline result | $520,784 |
| 70%-rule screen (ARV × 70% − rehab) | $450,500 |
| Break-even offer | $603,137 |
| Discount to ARV the MAO represents | 38.0% |
California-specific costs and rules
Taxes and transfer costs in California
Proposition 13 caps assessed-value growth at 2% per year and reassesses the property at market value on transfer — a long-held rental often pays a fraction of what a new owner pays. Flips also pay to exit: the model reserves 8.0% of ARV for commissions, transfer or excise taxes, and seller concessions. Check whether California charges a transfer tax at the county or city level — in some jurisdictions it lands entirely on the seller and can exceed the statewide norm.
Insurance while the house is vacant
Standard homeowners policies lapse or deny claims on vacant property. Budget a builder's-risk or vacant-property rider during the rehab; in California, region-specific hazards (wildfire and earthquake exposure shape western insurance) also affect what the rider costs and how fast crews can schedule work — both of which extend the holding period the model assumes at $3,350 per month.
Rehab scope in California
The default assumes a $125,000 budget, about 15% of ARV — a cosmetic rehab plus deferred mechanicals on a California home near the median. Older housing stock, code-required upgrades (electrical panels, knob-and-tube, permits), and contractor availability all push that number up; the contingency line exists because overruns are the norm, not the exception.
How to set your California maximum offer
- Start from the ARV: three fully renovated sold comparables within a mile, built in the last 12 months — not listings, and not the median value used in this example.
- Walk the property and build a scope-driven rehab estimate, then let the 10% contingency line absorb surprises.
- Reprice holding costs: hard-money interest on your actual purchase price, plus taxes, insurance, utilities, and security for the months the California jurisdiction realistically needs for permits.
- Set the target profit — 10% of ARV is the default; many flippers underwrite to a fixed dollar profit instead.
- Read the maximum allowable offer card and walk away above it. The break-even card shows the price at which the flip returns nothing at all.
Methodology
Purchase closing costs are a percentage of the offer itself, so the model solves them out algebraically: MAO = (ARV − total rehab − holding − selling costs − target profit) ÷ (1 + purchase closing cost %). The allocation bar distributes the ARV dollar-for-dollar across purchase, rehab, holding, selling, and profit so the pieces always sum to the exit value.
The California defaults — ARV at 110% of the statewide median, rehab at 15% of ARV — are illustrative market averages, not appraisals. The national MAO flip estimator guide covers each input, the classic 70% rule, and where the rule breaks down.
Sources
- Typical home value: Zillow Home Value Index (all homes, mid tier, seasonally adjusted), September 2026.
- Median household income: U.S. Census Bureau, American Community Survey 1-year estimates, table B19013, 2024.
- Median gross rent: U.S. Census Bureau, American Community Survey 1-year estimates, table B25064, 2024.
- Effective property tax rate: Median real estate taxes paid (B25103) ÷ median home value (B25077), Census ACS 1-year, the Tax Foundation's method, 2024.
- Homeowners insurance: Keystone estimate of a typical annual premium. Replace it with a quote for the address, 2026.
Read the full methodology, worked example, and caveats in the national MAO Flip Estimator guide.
California FAQ
- What is the 70% rule MAO for a California flip?
- ARV × 70% − rehab: $840,000 × 70% − $137,500 = $450,500. The rule ignores holding costs, closing costs, and your profit target — which is why the full model lands lower, at $520,784. Use the 70% rule to screen calls in California and the calculator to make offers.
- How much profit should a California flip target?
- The model defaults to 10% of ARV — $84,000 — which is also the textbook minimum for a risk-bearing flip. Lower-margin deals ($58,800 or less) only make sense when the exit is certain and the scope is nearly complete; in California, where holding costs run $3,350 per month, every extra month of overrun eats $3,350 of that margin.
- Why is the MAO lower than the 70% rule suggests in California?
- The 70% rule is a screen, not a model. The full MAO accounts for $20,100 of holding costs, $67,200 of exit costs, purchase closing costs on the offer itself, and your profit target — which is why it lands at $520,784 versus the rule's $450,500. In expensive California submarkets, selling costs alone (commissions plus transfer taxes) routinely exceed $67,200.
- What happens if I buy at the break-even offer in California?
- You work the entire rehab for nothing. The break-even offer of $603,137 is the price at which ARV exactly covers the offer, closing costs, rehab, holding, and selling costs with zero profit left. It is the walk-away number, not a negotiating target — and it does not fund the overruns that a $125,000 scope statistically produces.
Other state editions
Every state gets its own edition of the MAO Flip Estimator, preloaded with that market's typical values, tax rates, and insurance costs: