After Repair Value

What is After Repair Value (ARV)?

After Repair Value (ARV) represents the estimated future market value of a distressed or run-down property once all repairs, renovations, and upgrades are fully completed. It is a critical metric for real estate investors, particularly house flippers and "BRRRR" (Buy, Rehab, Rent, Refinance, Repeat) investors, to gauge whether a property deal is financially viable.

How to Calculate ARV in Real Estate

To determine a property's ARV, real estate investors rely on **Comparable Sales (Comps)**. Comps are recently sold properties in the immediate vicinity that match the size, age, and style of your target property after it is renovated.

The average price per square foot (PPSF) of these comps is calculated and multiplied by the target property's square footage:

$$\text{ARV} = \text{Average Price per Sq Ft of Comps} \times \text{Property Size (sq ft)}$$

The 70% Rule in House Flipping

The **70% Rule** is a widely used screening tool in house flipping. It advises that an investor should pay no more than 70% of the property's After Repair Value, minus the estimated repair costs:

$$\text{Maximum Allowable Offer (MAO)} = (\text{ARV} \times 0.70) - \text{Renovation Costs}$$

The remaining 30% acts as a safety cushion to cover holding costs, financing interest, buyer/seller closing fees, marketing, and the investor's profit margin.

How to Use This ARV Calculator

1. Select your ARV calculation method: **Direct Estimate** or **Comparable Sales (Comps)**.
2. Under Comps method, input the size and sold price of up to 3 recently sold local comparable properties.
3. Enter the target property size, purchase price, estimated renovation cost, and other holding expenses.
4. Adjust the target percentage slider if you operate in a high-cost or highly competitive market.
5. Review your **Maximum Allowable Offer (MAO)**, expected profit, and projected Return on Investment (ROI) instantly.

You can also plan your property financing using our related Mortgage Calculator and compare options using our 10/1 ARM Mortgage Calculator.