How to Calculate ARV (After Repair Value): A Step-by-Step Guide for Investors
ARV is the foundation of every fix and flip deal. Learn how to calculate after-repair value using comparable sales, adjustments, and lender guidelines. Avoid the #1 mistake new investors make.
# How to Calculate ARV (After Repair Value): A Step-by-Step Guide
Every fix and flip loan is based on ARV — after repair value. It's the most important number in your deal. Get it wrong and your entire project suffers. Here's how to calculate it correctly.
What Is ARV?
ARV is the estimated market value of a property after all planned renovations are complete. Lenders use ARV to determine maximum loan amounts — typically 65–70% of ARV.
The 70% Rule
A common rule of thumb in fix and flip:
> Maximum Purchase Price = (ARV × 0.70) − Rehab Cost
This ensures enough spread to cover loan costs, carrying costs, closing costs, and profit.
Example: - ARV: $200,000 - Rehab: $35,000 - Max Purchase: ($200,000 × 0.70) − $35,000 = $105,000
Step 1: Find Comparable Sales (Comps)
Search for properties that: - Are within 0.5–1 mile of your subject property - Sold in the last 90–180 days - Are similar in size (within 15–20% of square footage) - Are similar in style (ranch vs. ranch, colonial vs. colonial) - Are in similar condition (fully renovated or updated)
Sources: MLS (via your agent), Zillow sold data, Redfin, county assessor records.
Step 2: Adjust for Differences
No two properties are identical. Make adjustments for:
| Feature | Typical Adjustment |
|---|---|
| Garage (1 car) | $5,000–$12,000 |
| Bathroom (full) | $8,000–$15,000 |
| Basement (finished) | $10,000–$25,000 |
| Lot size (per 1,000 sf) | $2,000–$5,000 |
| Square footage (per sf) | $50–$100 |
Adjustments vary significantly by market. Get local data.
Step 3: Weight Your Comps
Use 3–5 comparable sales and average them (weighted toward the most similar ones). Discard outliers.
Step 4: Apply a Conservative Buffer
New investors should apply a 5–10% discount to their estimated ARV to account for: - Time on market - Price reductions - Market fluctuations - Appraisal gaps
If your comps suggest $210,000, use $190,000–$200,000 in your deal model.
Common ARV Mistakes
- Using asking prices — Use sold prices only
- Using comps from different neighborhoods — A 2-block difference can be significant
- Ignoring condition — Only compare to fully renovated properties
- Overstating square footage — Measure carefully; appraisers will
- Using stale data — In fast-moving markets, 6-month-old comps may be outdated
How Lenders Use ARV
Most private lenders cap loans at 65–70% of ARV. If your lender uses 70% ARV and your ARV is $200,000, the maximum loan is $140,000 — regardless of purchase price or rehab costs.
Use our fix and flip calculator to instantly see how ARV affects your loan amount and deal feasibility.