Whether you’re flipping houses, BRRRRing rentals, or lending on real estate deals, knowing how to calculate After Repair Value (ARV) is non-negotiable. ARV is the estimated market value of a property after all renovations are completed—and it’s the number that determines how much you can borrow, how much you’ll profit, and whether the deal is even worth it.
Here’s how to calculate ARV with confidence like a pro.
Step 1: Know What ARV Is (And Why It Matters)
ARV = Market Value after renovations.
It’s the price the property could sell for once fully repaired and upgraded to market standards.
Investors use ARV to:
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Determine their Maximum Allowable Offer (MAO)
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Estimate loan amounts with hard money lenders
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Calculate profit margins and return on investment
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Project rent potential and refinance options in a BRRRR strategy
Step 2: Find Solid Comparables (Comps)
Good comps = good ARV.
Look for 3–5 recently sold homes that are:
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Within 0.5 miles (closer is better)
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Sold in the last 3–6 months
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Same bedroom and bathroom count
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Similar square footage (within 15–20%)
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Similar age and style
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In the same school district and neighborhood
Use Zillow, Redfin, MLS, PropStream, or local realtors to pull comps. Avoid using active listings—only closed sales give reliable values.
Step 3: Adjust for Differences
No two properties are identical, so you’ll need to adjust for differences. For example:
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If your comp has a 2-car garage and yours has none, subtract value
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If your rehab includes granite counters and updated bathrooms, add value
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Account for pools, finished basements, lot size, and other major features
Adjust conservatively. A professional appraiser might value a garage at $5,000–$10,000 depending on the market. Stay objective.
Step 4: Run the Numbers
After adjusting, average your top 3–5 comps. That number is your ARV.
Example:
Comp 1 (after adjustments): $250,000
Comp 2: $255,000
Comp 3: $245,000
ARV = ($250,000 + $255,000 + $245,000) ÷ 3 = $250,000
Step 5: Work Backward from ARV
Once you know ARV, you can determine:
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Your max offer
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Your rehab budget
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Your loan request
Use the popular formula:
MAO = ARV × 70% – Rehab Costs
If ARV is $250,000 and rehab is $40,000:
MAO = $250,000 × 0.70 – $40,000 = $135,000
That’s your max purchase price if you want to stay profitable.
Pro Tips for ARV Accuracy:
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Always walk the comps when possible
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Understand the buyer profile in your market (retail vs. investor)
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Keep up with market shifts—ARV can change with the market
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Don’t overinflate your ARV to “make a deal work.” That’s how investors lose.
Final Thoughts
A solid ARV gives you clarity, leverage, and peace of mind. Whether you’re a buyer, lender, or wholesaler, learning to calculate ARV the right way protects your investment and positions you to make smart, strategic decisions.
In real estate, your numbers are your foundation—so make sure they’re solid.
