Investor Education
After Repair Value (ARV)
— How to Estimate It Right
ARV is the estimated market value of a property after renovations are complete. It’s the foundation of every flip, BRRRR deal, and rehab decision. Here’s how to calculate it with confidence.
ARV
Comps
Rehab Budget
MAO
70% Rule
ROI
Key Formulas at a Glance
ARV
≈ Average Sold Price of similar renovated comps (adjusted)
$/SqFt
Avg Comp $/sqft × Your Home’s Finished Sq Ft
MAO
(ARV × 70%) − Repair Costs
The 70% rule is a fast filter — adjust the % based on your market, costs, and profit target.
Definition
What Is ARV?
After Repair Value (ARV) is what a renovated property should sell for in today’s market once repairs and upgrades are complete. It’s an estimate — not a guarantee — and it’s always based on what comparable, renovated homes have actually sold for recently.
Investors use ARV to:
Decide whether a flip or BRRRR deal has enough profit margin to be worth pursuing
Determine a maximum purchase price (MAO) — the most you should pay and still hit your profit target
Plan a rehab scope that matches what buyers in that neighborhood will actually pay for
Estimate equity and financing options after renovations (critical for BRRRR refinances)
Quick shortcut: Don’t want to do the math manually? Use our free ARV & MAO Calculator to estimate After Repair Value from comps and determine your Maximum Allowable Offer in seconds.
Step-by-Step
How to Calculate ARV
ARV is not a guess — it’s a comps-driven estimate. Here’s the process in four steps:
1
Choose the right comps — Recent sold homes in the same neighborhood, similar size, age, bed/bath count, and matching your planned finished condition. Not active listings. Not pending. Sold.
2
Adjust comps for differences — Square footage, garage, lot size, condition, upgrades. No comp is a perfect match; adjustments bring them closer to apples-to-apples.
3
Use $/sq ft as a cross-check — Calculate average $/sqft from your comps and multiply by your home’s finished square footage. This validates (or flags problems with) your comp average.
4
Validate against active/pending listings — Confirm what the market is pricing right now. If your ARV is above what current listings are asking, reconsider. Markets move.
Comp Quality
Comp Selection Rules That Prevent Bad ARV
Bad comps produce bad ARV. These rules help you select comparables that actually reflect what your property will sell for after renovation.
Recency
Last 3–6 months, no older
In faster markets, use a tighter 2–3 month window. Older sales reflect different market conditions — and markets can shift quickly.
Distance
Same subdivision or neighborhood
Crossing a major road or school district boundary can change values significantly. Proximity matters more than you’d expect.
Similarity
Within ~15–20% on square footage
Match bed/bath count, style (ranch vs. two-story), and general layout. A 1,400 sqft comp is a stretch for a 2,200 sqft subject.
Condition Match
Match your planned finish level
Your comps must reflect the finished condition you’re targeting — not what the home looks like today. If you’re doing a full rehab, use fully rehabbed comps.
If you can’t find 3+ tight comps: widen the time window before widening geography. If you still can’t find comps, that illiquidity is a risk factor — it means your ARV estimate has more uncertainty and your offer should reflect that.
The Math
ARV Formulas Investors Actually Use
1. ARV from Comps (Primary Method)
Average Comp Method
ARV ≈ Average Sold Price of Similar Renovated Comps (after adjustments)
Use the median or adjusted average — not the highest sale. Price your deal off a realistic, conservative number.
2. ARV Using $/Sq Ft (Cross-Check)
Price Per Sq Ft Method
ARV ≈ (Adjusted $/sq ft from Renovated Comps) × (Your Home’s Finished Sq Ft)
Use this as a sanity check against your comp average — not as the primary method. It’s less reliable for smaller samples or highly unique properties.
3. MAO — Maximum Allowable Offer (70% Rule)
70% Rule — Common Flip Heuristic
MAO ≈ (ARV × 0.70) − Repair Costs
The 70% is a fast filter, not a law. Your actual percentage changes based on market competitiveness, holding costs, financing costs, and your required profit target. Competitive markets often see investors at 75–80%+.
Want to run these formulas against real numbers? The ARV + MAO Calculator lets you enter up to 6 comps, repair costs, holding costs, and a custom discount percentage — and outputs both ARV methods plus a deal verdict.
Real Numbers
ARV Worked Example
Three renovated comps in the same neighborhood sold recently. Here’s how to go from comps to a maximum offer:
| Comp | Sold Price | Sq Ft | Notes / Adjustments |
|---|---|---|---|
| Comp #1 | $290,000 | 1,480 sqft | Similar size and finish to planned renovation |
| Comp #2 | $300,000 | 1,520 sqft | Newer kitchen than planned — slight downward adjustment |
| Comp #3 | $285,000 | 1,440 sqft | Slightly smaller — minor upward adjustment |
Conservative ARV Estimate
$292,000 – $295,000
Using $295,000 ARV and a $35,000 repair budget:
MAO Calculation
MAO = (295,000 × 0.70) − 35,000
MAO = 206,500 − 35,000 = $171,500
MAO = 206,500 − 35,000 = $171,500
If the seller wants $210,000, your numbers show why that pricing doesn’t work at standard margins. You can use this math to explain your offer — not just state a number.
Want to compare deal options? See all tools at our Real Estate Tools hub. Evaluating land instead? See How to Calculate an Offer on Land.
What Goes Wrong
Common ARV Mistakes — and How to Avoid Them
Most ARV errors fall into a few predictable patterns. Knowing them in advance saves money.
Using Active Listings as ARV
List prices aren’t sold prices. A seller can ask anything — what matters is what buyers actually paid. Always base ARV on closed sales first.
Mixing Neighborhoods
Crossing a major road or school district boundary can change values dramatically — even on the same street. Comps must be hyper-local.
Over-Upgrading the Rehab
The nicest house on the block rarely gets paid for dollar-for-dollar. Match your finish level to what buyers in that price range expect — not what you’d want in your own home.
Ignoring Market Direction
Prices, rates, and days-on-market change. Validate with the most recent sales possible. A comp from 8 months ago may reflect a different market entirely.
Forgetting All the Costs
Holding costs, closing costs, financing fees, and agent commissions can add up to 8–12% of ARV. If you haven’t accounted for them, your “profit” isn’t what you think.
Pricing Off the Highest Comp
The highest sale is an outlier — it may have had unique features, a motivated buyer, or unusual timing. Price off the median or conservative estimate, not the ceiling.
FAQ
ARV Questions, Answered
What does ARV mean in real estate? +
ARV stands for After Repair Value — the estimated market value of a property after renovations are completed. It’s the foundation of flip analysis, BRRRR underwriting, and rehab budgeting.
How do I find comps to estimate ARV? +
Start with recent sold homes in the same neighborhood that match your property’s size, layout, and your planned finished condition. Then adjust for differences — square footage, bed/bath count, garage, lot, and upgrade level. Your agent, MLS access, or platforms like Redfin and Zillow (sold filter) can surface comps.
Is ARV the same as appraised value? +
Not exactly. ARV is an investor’s estimate of a property’s future value after rehab. An appraisal is a licensed appraiser’s formal opinion of value — usually based on current condition unless it’s a subject-to-completion appraisal ordered by a lender for a renovation loan.
Does the 70% rule always work? +
No — it’s a fast screening tool, not a rule. In competitive markets, investors routinely pay 75–80%+ of ARV. In slower markets or higher-risk rehabs, you may need to be at 65% or lower. The right threshold depends on holding costs, financing costs, market absorption, and your required profit margin.
What’s a good ARV confidence check? +
Cross-check your comp average against the $/sqft method. If both methods land within 5% of each other, your ARV estimate has good internal consistency. If they diverge significantly, re-examine your comps — something is off. Also validate against current active/pending listings to confirm today’s market is supporting your number.
How does ARV affect a BRRRR deal? +
In a BRRRR, the refinance is based on the appraised value after renovation — which ideally matches your ARV estimate. If your ARV is too high, the appraiser may come in lower, and you won’t be able to pull out as much cash as planned, reducing the deal’s effectiveness.
Apply It
Next Steps
Now that you understand how ARV works, here’s how to put it into practice: