How to Calculate ARV (After Repair Value) for Flips and BRRRR
Learn how to calculate after repair value using comparable sales. Covers comp selection, adjustments, and how ARV drives the 70% rule and BRRRR refinance math.
After Repair Value (ARV) is the estimated market value of a property after renovations are complete. It is the single most important number in any fix-and-flip or BRRRR deal because it determines your maximum allowable offer, your profit margin, and your refinance ceiling.
Get ARV wrong and every downstream calculation falls apart. Overestimate by 10% on a flip and your projected $30K profit becomes a $5K loss. Overestimate on a BRRRR and you leave capital trapped in the deal that was supposed to recycle into your next acquisition.
This guide covers the comp-based methodology that appraisers and experienced investors use, including how to pull comps, make adjustments, and stress-test your number.
The ARV Formula
ARV is not a formula in the mathematical sense. It is an estimate derived from comparable sales:
ARV = Average Adjusted Sale Price of Comparable Properties
The quality of your ARV depends entirely on the quality of your comps. Everything below is about finding and adjusting the right comps.
Step 1: Define Your Subject Property’s “After” Condition
Before pulling comps, you need a clear renovation scope. ARV represents the property after rehab, so you need to know what “after” looks like:
- How many bedrooms and bathrooms will it have?
- What is the finished square footage?
- What level of finishes? (Builder grade, mid-range, or high-end?)
- Will you add or remove any features (garage, deck, basement finish)?
Your comps must match the renovated property, not the current distressed condition.
Step 2: Pull Comparable Sales
Use the MLS (via your agent), Redfin, Zillow, or PropStream to find recent sales that match your subject property’s post-renovation profile.
The Three Comp Filters
1. Proximity — Within 0.5 to 1 Mile
Start with a 0.5-mile radius. If you cannot find at least 3 comps, expand to 1 mile. In rural areas, you may need to go wider, but comps beyond 3 miles lose reliability. Stay within the same neighborhood and school district whenever possible.
2. Recency — Sold Within 3 to 6 Months
Appraisers strongly prefer sales within 90 days. Sales older than 6 months require market condition adjustments and carry more uncertainty. In slow markets with few transactions, you may need to stretch to 6 months, but note the risk.
3. Similarity — Matching Property Profile
The closer the comp matches your subject, the fewer adjustments you need. Prioritize:
- Same property type (SFR to SFR, not SFR to condo)
- Within 200 sq ft of your finished square footage
- Same bedroom/bathroom count (or within 1)
- Same lot size range (within 20%)
- Similar age and construction style
- Similar condition (renovated comps for a renovated subject)
Step 3: Adjust Comps to Match Subject
No comp is a perfect match. You adjust each comp’s sale price to reflect what it would have sold for if it matched your subject property exactly.
Common Adjustments
| Feature Difference | Typical Adjustment |
|---|---|
| Extra bedroom | +$5,000 to +$15,000 |
| Extra bathroom | +$5,000 to +$20,000 |
| Square footage (per sq ft) | +/- $30 to $100/sq ft (market dependent) |
| Garage (2-car vs none) | +$15,000 to +$30,000 |
| Finished basement | +$10,000 to +$40,000 |
| Pool | +$5,000 to +$20,000 |
| Lot size (per acre) | Varies widely |
| Age difference (per year) | -$500 to -$1,500 for older |
| Condition (updated vs dated) | +$10,000 to +$30,000 |
These ranges vary significantly by market. In a $150K neighborhood, an extra bedroom might add $5K. In a $500K neighborhood, it might add $15K. Use local data and your agent’s experience to calibrate.
Adjustment Direction
If the comp has a feature the subject does not, subtract from the comp’s price. If the subject has a feature the comp does not, add to the comp’s price. You are always adjusting the comp toward the subject.
Step 4: Worked Example
You are evaluating a distressed 3-bedroom, 1-bathroom ranch in a Midwest suburb. After renovation, it will be a 3-bed/2-bath with 1,200 sq ft, updated kitchen and baths, and no garage. Purchase price is $95,000, rehab budget is $40,000.
Comp Data
| Comp | Sale Price | Sold | Sq Ft | Bed/Bath | Garage | Condition |
|---|---|---|---|---|---|---|
| Comp A | $178,000 | 45 days ago | 1,250 | 3/2 | None | Renovated |
| Comp B | $192,000 | 60 days ago | 1,300 | 3/2 | 2-car | Renovated |
| Comp C | $169,000 | 30 days ago | 1,150 | 3/1 | None | Renovated |
Adjustments
Comp A ($178,000)
- Sq ft: 1,250 vs 1,200 = -50 sq ft x $50/sq ft = -$2,500
- Adjusted: $175,500
Comp B ($192,000)
- Sq ft: 1,300 vs 1,200 = -100 sq ft x $50/sq ft = -$5,000
- Garage: Comp has 2-car, subject has none = -$20,000
- Adjusted: $167,000
Comp C ($169,000)
- Sq ft: 1,150 vs 1,200 = +50 sq ft x $50/sq ft = +$2,500
- Bathroom: Comp has 1, subject has 2 = +$8,000
- Adjusted: $179,500
ARV Calculation
Average of adjusted comps: ($175,500 + $167,000 + $179,500) / 3 = $174,000
You might round to $170,000-$175,000 for conservative underwriting. When in doubt, use the lower end.
How ARV Drives the 70% Rule
The 70% rule states that your maximum offer on a flip should be:
Maximum Offer = ARV x 70% - Rehab Costs
Using our example:
$174,000 x 0.70 - $40,000 = $81,800
The asking price of $95,000 exceeds the 70% rule threshold by $13,200. You would either negotiate down, reduce rehab scope, or pass on the deal. Run the full analysis in our flip calculator.
How ARV Drives BRRRR Refinance
In a BRRRR deal, your cash-out refinance is based on the appraised value (which should approximate your ARV if the rehab was executed correctly). Most lenders offer 70-75% LTV on cash-out refinances.
Using our example with a 75% LTV refinance:
| Item | Amount |
|---|---|
| ARV / Appraised value | $174,000 |
| Refinance (75% LTV) | $130,500 |
| Total cash invested (purchase + rehab + costs) | $140,000 |
| Cash recovered | $130,500 |
| Cash left in deal | $9,500 |
You recover 93% of your invested capital. If the ARV had been $160,000 instead, the refinance would only yield $120,000, leaving $20,000 in the deal — a meaningful difference in capital efficiency.
For BRRRR-specific analysis, use our BRRRR calculator.
Common ARV Mistakes
1. Using Active Listings Instead of Closed Sales
List prices are asking prices, not market values. Sellers can list at whatever they want. Only use closed sales as comps. Pending sales can supplement your analysis but should not replace closed comps.
2. Cherry-Picking High Comps
It is tempting to use the three highest sales in the neighborhood and call that your ARV. Appraisers will not do this, and neither should you. Use the most similar comps, even if they are not the highest.
3. Over-Improving for the Neighborhood
If every renovated home in the neighborhood sells for $170K-$180K and you install $50K in upgrades expecting $210K, you will not hit that number. Buyers compare your property to others on the block. There is a ceiling in every neighborhood.
4. Ignoring Market Trends
If the market is declining 3% per year and your comps are 6 months old, your actual ARV is roughly 1.5% below the comp-derived value. In rising markets, the opposite is true, but conservative underwriting means never relying on appreciation.
5. Using Comps from a Different Sub-Market
A comp 0.8 miles away but across a major highway, in a different school district, or in a visibly different neighborhood is not a valid comp regardless of physical proximity.
Tools for Pulling Comps
| Tool | Access | Best For |
|---|---|---|
| MLS (via agent) | Requires licensed agent | Most accurate and complete data |
| Redfin | Free | Recent sales with good filtering |
| Zillow | Free | Broad coverage, less reliable on details |
| PropStream | $99/mo | Investor-focused, includes distressed leads |
| County assessor website | Free | Verified sale prices, tax records |
For serious investors, MLS access through a buyer’s agent is the gold standard. Supplement with tax records from the county assessor to verify sale prices.
Stress-Testing Your ARV
Never rely on a single ARV estimate. Build a range:
- Conservative ARV: Use the lowest adjusted comp. This is your downside scenario.
- Base ARV: Use the average of all adjusted comps. This is your underwriting number.
- Optimistic ARV: Use the highest adjusted comp. Never underwrite to this number.
Run your flip or BRRRR deal at the conservative ARV. If the deal still works at that number, you have margin for error. If it only works at the optimistic ARV, walk away.
For more on structuring flip deals, see our fix and flip guide.
Frequently Asked Questions
How accurate is ARV compared to the actual sale price?
Experienced investors and appraisers typically land within 3-5% of the actual sale price when using proper comp methodology. Beginners often miss by 10-15% because of poor comp selection or inadequate adjustments. The more comps you analyze and the tighter your comp criteria, the more accurate your estimate.
Can I use Zillow’s Zestimate as my ARV?
No. Zestimates are algorithm-driven and do not account for renovation scope. They are based on the property’s current condition and broad market data. A Zestimate might be useful as a rough sanity check, but it should never replace a comp-based ARV analysis.
How many comps do I need?
A minimum of 3 comparable sales is standard. Five or more is ideal. If you can only find 1-2 comps, your ARV estimate carries significant uncertainty and you should widen your margin of safety.
Should I get a professional appraisal before buying?
For your first few deals, paying $400-$600 for a professional appraisal before committing to a contract is worthwhile insurance. Once you have experience with comp analysis in your target market, you can rely on your own estimates and reserve the appraisal for the refinance stage.
How does ARV differ from assessed value?
Assessed value is the county’s estimate for tax purposes and is often 10-30% below market value. It is not a reliable indicator of what a property will sell for. Always base your ARV on actual comparable sales, not assessed values.