After Repair Value (ARV)

What Is After Repair Value (ARV)?

After repair value (ARV) is the estimated market value of a property after all planned renovations and improvements are complete. It is the cornerstone metric for fix-and-flip investors and BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategists. Every dollar you spend on acquisition and rehab is justified — or not — by the ARV. Get it wrong and you can lose tens of thousands of dollars on a single deal.

How to Determine ARV

ARV is determined through comparable sales analysis (comps). Pull recently sold properties in the same neighborhood that are similar in size, age, bedroom/bathroom count, and — critically — renovation level to what your property will look like after rehab. Ideally, use 3–5 comps sold within the last 6 months and within a half-mile radius. Adjust for differences: add or subtract value for extra bedrooms, garage vs. no garage, lot size variations, and finish quality. The adjusted average of your comps is your ARV.

The 70% Rule

The 70% rule is the most widely used ARV-based acquisition formula for flippers. It states: Maximum Purchase Price = ARV × 70% − Estimated Rehab Costs. If a property's ARV is $250,000 and it needs $40,000 in renovations, the maximum you should pay is ($250,000 × 0.70) − $40,000 = $135,000. The 30% margin covers holding costs, transaction costs, financing, and your profit. In competitive markets, some investors stretch to 75–80%, but this compresses margins and increases risk.

ARV in the BRRRR Strategy

For BRRRR investors, ARV determines how much equity you can pull out during the refinance step. Most lenders will refinance at 70–75% of the appraised (post-rehab) value. If your ARV is $250,000, you can expect a refinance loan of $175,000–$187,500. If your total acquisition plus rehab cost is $160,000, you recover most or all of your capital and keep the cash-flowing rental. This only works when you buy significantly below ARV — which is why accurate ARV estimation is non-negotiable.

Why ARV Matters

ARV is the anchor for your entire deal analysis. Overestimate it and you overpay for the property, over-improve it, or both. Underestimate it and you pass on profitable deals. In fix-and-flip, ARV directly determines your profit margin. In BRRRR, it determines whether you can recycle your capital. Lenders, hard money lenders, and private investors all evaluate deals based on their own ARV assessment — your credibility depends on accurate estimates.

Practical Tips

Never rely on Zillow's Zestimate or automated valuations for ARV — always pull actual comps from the MLS. Drive the comps in person to verify condition and neighborhood quality. Be honest about your renovation scope: if your comps are fully gut-renovated with high-end finishes and you're doing a cosmetic refresh, your ARV should be lower. Build a relationship with a local appraiser who can provide informal opinions before you commit to a deal. And always pad your rehab budget by 10–20% because renovations almost always cost more than planned.