Real Estate Glossary
What is ARV (After Repair Value)? Definition, Formula & Examples
Target keyword: "what is after repair value" · 1,900 searches/mo
Definition
After Repair Value (ARV) is the estimated market value of a property after all planned renovations and repairs have been completed. It is the critical number for fix-and-flip investors and BRRRR investors because it determines how much you can borrow in a refinance and whether a deal has enough profit margin to be worthwhile.
The ARV (After Repair Value) Formula
Variables explained:
Current Value is what the property is worth in its current as-is condition. Value Added by Renovations is the increase in market value — not the cost of renovations. You estimate ARV primarily by running comparable sales (comps) of similar recently sold properties in fully repaired condition.
ARV (After Repair Value) Example with Real Numbers
A distressed house sells for $120,000 as-is. Comparable fully renovated homes in the neighborhood sell for $200,000–$210,000. You estimate an ARV of $200,000. Your planned renovation budget is $35,000. Maximum allowable offer (using the 70% rule) = $200,000 × 0.70 − $35,000 = $105,000. Since you bought at $120,000, this deal is too tight — proof that ARV analysis must happen before making an offer.
Why ARV (After Repair Value) Matters for Investors
ARV sets the ceiling on what you can profitably pay for a distressed property. It also determines how much cash you can pull out in a BRRRR refinance. Overestimating ARV is the most common mistake new investors make — it leads to deals where renovation costs and financing eat all the profit. Always base ARV on recent, comparable sold properties, not list prices.
Calculate ARV (After Repair Value) for your property
Free — no signup required. Instant results.
Frequently Asked Questions
How do I calculate ARV?
Pull 3–5 comparable sales (comps) within 0.5 miles, sold in the last 90 days, with similar square footage and condition to your post-renovation property. Average (or weight) their price per square foot and multiply by your property's square footage.
What is the 70% rule in real estate?
The 70% rule says: maximum offer = ARV × 0.70 minus estimated repair costs. The 30% buffer covers holding costs, financing, closing costs on both ends, and profit margin.
Who estimates ARV?
Investors typically estimate ARV themselves using MLS comps, then verify with a licensed appraiser (required for refinancing) or a knowledgeable real estate agent.
Is ARV the same as appraised value?
Not exactly. ARV is your estimate before work begins. An appraised value is a licensed appraiser's formal opinion after the work is done (or sometimes done "subject to" completion). Lenders use the formal appraisal for loan decisions.
Related Terms
ARV Formula
The ARV formula estimates the after-repair value of a property by analyzing comparable rec…
BRRRR Method
BRRRR is an investment strategy acronym standing for Buy, Rehab, Rent, Refinance, Repeat. …
Hard Money Loan
A hard money loan is a short-term, asset-based loan from a private lender (not a bank) whe…
Equity in Real Estate
Equity in real estate is the difference between a property's current market value and the …