How to Calculate ARV (After-Repair Value): A Fix & Flip Investor’s Guide

ARV (After-Repair Value) is the estimated market value of a property after all renovations are complete. It is the single most important number in any fix and flip deal — it determines your maximum purchase price, your loan amount, and your potential profit. Getting ARV wrong is the most common reason investors lose money on flips.

What Is ARV?

ARV stands for After-Repair Value. It represents what the property will be worth once you complete your planned renovations. Lenders use ARV to determine how much they’ll lend. Investors use it to determine how much to offer. Everything downstream — your profit margin, your loan-to-value ratio, your exit strategy — flows from an accurate ARV calculation.

How to Calculate ARV: Step-by-Step

Step 1: Define the subject property. Note the exact square footage, number of bedrooms and bathrooms, lot size, year built, and condition after planned renovation.

Step 2: Find comparable sold properties (comps). Search MLS data or public records for properties sold within 0.5 miles in the last 90 days. Match as closely as possible on: square footage (within 15%), beds/baths, lot size, and condition. You need at least 3 solid comps.

Step 3: Adjust for differences. Add or subtract value for differences between your property and the comps. Typical adjustments: $50-$100/sq ft for size differences, $5,000-$15,000 per bedroom/bathroom, $10,000-$30,000 for garage, $5,000-$20,000 for pool/basement.

Step 4: Calculate the adjusted value per comp and average them. Your ARV is the weighted average of your adjusted comps.

Worked Example

You’re looking at a 1,500 sq ft 3BR/2BA house in Phoenix that needs full renovation. Three nearby comps sold in the last 60 days:

Comp A: 1,480 sq ft, 3BR/2BA, fully renovated — sold for $340,000
Comp B: 1,550 sq ft, 3BR/2BA, renovated — sold for $355,000
Comp C: 1,520 sq ft, 3BR/2BA, renovated — sold for $348,000

Average: $347,667. Your ARV = approximately $347,000.

The 70% Rule

The 70% rule is the investor’s quick-check formula: Maximum Offer = (ARV × 70%) – Rehab Costs. Using our example: ($347,000 × 0.70) – $50,000 rehab = $242,900 – $50,000 = $192,900 maximum offer. This builds in your profit margin and accounts for carrying costs, closing costs, and the cost of capital.

How Lenders Use ARV

Hard money lenders like Ambition Lending lend up to 75% of ARV on fix and flip loans. Using our example: 75% × $347,000 = $260,250 maximum loan amount. This covers most purchase prices plus a significant portion of rehab costs, preserving your cash while maximizing leverage.

Common ARV Mistakes

Using listings (not sold) as comps — listings don’t reflect actual market value
Comparing incompatible properties — different neighborhoods, lot sizes, or school districts
Using stale comps — anything older than 6 months in a moving market is suspect
Over-improving — renovating above neighborhood comp ceiling destroys ROI

Frequently Asked Questions

What does ARV mean in real estate?

ARV stands for After-Repair Value — the estimated market value of a property after planned renovations are complete. It is used by fix & flip investors and hard money lenders to determine the maximum loan amount and offer price for an investment property.

How accurate does my ARV estimate need to be?

ARV estimates should be within 5-10% of actual value for deal math to work. A 10% ARV error on a $350,000 property is $35,000 — which can eliminate your entire profit margin. Always use 3+ recent comparable sales within 0.5 miles and adjust carefully.

Can a hard money lender help me calculate ARV?

Yes. Hard money lenders like Ambition Lending evaluate ARV as part of the underwriting process. We review your comps and can provide guidance on whether your ARV estimate is realistic. Submit your deal at ambitionlending.co and receive a term sheet within 24 hours.

What is the 70% rule for fix and flip?

The 70% rule states that a fix & flip investor should pay no more than 70% of the ARV minus rehab costs. Formula: (ARV × 0.70) – Rehab = Maximum Purchase Price. This builds in margin for profit, carrying costs, and cost of capital.

How do hard money lenders determine loan amounts based on ARV?

Hard money lenders typically lend up to 70-75% of ARV. Ambition Lending lends up to 75% of ARV on fix & flip loans, which means on a $350,000 ARV property, the maximum loan is $262,500. This covers most purchase costs plus a significant portion of renovation budget.

Ready to fund your next fix & flip deal? Apply at ambitionlending.co — term sheets in 24 hours, closes in 5 days.