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Investing

After Repair Value (ARV)

Also called ARV

In short

After repair value (ARV) is the estimated market value of a property once planned repairs and renovations are complete. Investors use it to decide how much to pay for a fixer-upper.

Based on
Renovated comparable sales
Used for
Max offer, loan sizing
Rule of thumb
The 70% rule
Biggest risk
Overestimating it

How ARV is estimated

ARV comes from recent sales of similar homes nearby that are in the condition yours will be in after renovation. Pick comps with the same bedroom and bathroom count, similar size and finish level, then adjust for differences, as you would in a comparative market analysis. Don't just add your repair cost to the purchase price; renovations rarely add value dollar for dollar.

How investors use ARV

ARV drives the maximum offer, usually with a rule like the 70% rule. Hard money lenders cap loans at a percentage of ARV. In the BRRRR method, ARV determines how much cash a refinance can pull out.

Getting ARV wrong

Common mistakes are using comps from a better neighborhood, comparing with higher-end finishes than you plan, using old sales in a falling market, or ignoring how distressed sales nearby pull values down. A conservative ARV protects your margin.

The formula

A common estimate from comparable sales
ARV ≈ Comparable price per sq. ft. × Home's sq. ft.
Comparable price per sq. ft.
From recent sales of similar, renovated homes nearby
Try it in the Fix and Flip Calculator →
Example

Estimating ARV from three comps

An investor is looking at a dated 3-bed, 2-bath house. Three nearby renovated 3/2 homes of similar size sold in the last four months for $268,000, $275,000 and $281,000. After small adjustments, the investor uses an ARV of $272,000, slightly below the average, to stay conservative.

After Repair Value (ARV) vs. Appraisal

After Repair Value (ARV)

After repair value (ARV) is the estimated market value of a property once planned repairs and renovations are complete. Investors use it to decide how much to pay for a fixer-upper.

Appraisal

An appraisal is a licensed appraiser's independent estimate of a property's market value. Lenders require one to make sure the home is worth at least the amount being borrowed.

The differenceARV is a projected future value after repairs; an appraisal is a licensed appraiser's opinion of value, usually as-is unless it's an as-completed appraisal for a renovation loan.

Frequently Asked Questions

Related terms

The 70% RuleInvestingThe 70% rule is a fix-and-flip guideline: pay no more than 70% of a property's after repair value (ARV) minus the cost of repairs. It leaves room for profit, holding and selling costs.Comparative Market Analysis (CMA)Buying & closingA comparative market analysis (CMA) is a real estate agent's estimate of a home's value based on recent sales, pending sales and active listings of similar nearby properties.Hard Money LoanMortgages & financingA hard money loan is a short-term loan from a private lender, secured mainly by the property's value rather than the borrower's income. Investors use it to buy and renovate properties quickly.BRRRR MethodInvestingThe BRRRR method is a rental investing strategy: buy a distressed property, rehab it, rent it, refinance based on the higher value, and repeat with the cash pulled out.FHA 203(k) LoanMortgages & financingAn FHA 203(k) loan is a government-insured mortgage that combines a home's purchase price and the cost of repairs into one loan. It lets owner-occupants buy and fix up homes that need work.Real Estate WholesalingInvestingReal estate wholesaling is putting a property under contract at a discount and then assigning that contract, or reselling the property, to another investor for a fee, without renovating it.Resale (After Foreclosure)InvestingA resale is the last stage of the foreclosure lifecycle: a buyer or investor who bought the property at auction or from the bank repairs it, then lives in it, rents it out or sells it again on the open market.Home InspectionBuying & closingA home inspection is a professional visual examination of a home's structure and systems, ordered by the buyer to find defects before closing. It usually happens during the inspection contingency period.

Learn more in the knowledge base

Researching a Foreclosure Property Before the AuctionGuide · 6 min readAt a foreclosure auction you usually buy as-is, unseen and without contingencies, so research done before the sale is your only protection. This guide covers how to confirm the sale details, check title and liens, estimate value and repairs from the outside and turn it all into a maximum bid.Inspecting and Negotiating on a Bank-Owned (REO) PropertyGuide · 7 min readBank-owned homes are sold as-is, often after sitting vacant, so a thorough inspection is the most important step in the purchase. This guide covers how to get the home ready to inspect, what to look for, what banks will and will not negotiate and how to handle appraisal and title issues before closing.How to Evaluate a Pre-Foreclosure DealGuide · 6 min readOnce an owner is interested in selling, you can replace rough screening estimates with real numbers. This guide walks through confirming what is owed, finding every lien, assessing condition and repairs, estimating value, and turning those figures into a maximum price you will not go above.
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Disclaimer: The information on this page is for general educational purposes only and is not legal, financial, tax or investment advice. Laws, lending rules and market conditions vary by state and change over time, and any figures shown are estimates. Before you buy, sell, finance or bid on a property, consult a qualified attorney, financial advisor, lender or licensed real estate professional about your situation.