What is ARV (After Repair Value)?
ARV stands for After Repair Value — it's the estimated market value of a property after all renovations and improvements have been completed. ARV is the single most important number in any fix-and-flip deal because it determines your maximum allowable offer (MAO) and your projected profit.
How to Calculate ARV
The most common method is the comparable sales approach:
- Find 3-5 comparable properties that recently sold in the same area (within 0.5 miles, sold within 6 months)
- Calculate the price per square foot for each comp
- Adjust for condition — if a comp was in better condition than your subject, reduce its price per sq ft
- Multiply the average adjusted price per sq ft by your subject property's square footage
Formula: ARV = Average Adjusted Price/Sq Ft × Subject Property Sq Ft
ARV and the 70% Rule
Most experienced investors use the 70% rule to determine their maximum offer. The formula is: Maximum Offer = (ARV × 70%) - Repair Costs. This ensures you have enough margin for unexpected expenses and still turn a healthy profit. Try our free 70% rule calculator to run this calculation.
Tips for Accurate ARV Estimates
- Use recent sales — the more recent the comp, the more accurate
- Stay local — comps should be in the same neighborhood, not just the same zip code
- Match property type — compare single-family to single-family, condo to condo
- Account for condition — a fully renovated comp is worth more per sq ft than a dated one
- Use at least 3 comps — one outlier won't skew your estimate as badly