After Repair Value

After Repair Value (ARV) is the estimated market value of a property once renovations are complete — the number every other number in a flip or BRRRR deal is built on. Get ARV wrong and your maximum offer, your rehab budget, and your exit price are all wrong with it. This is the single most important number to nail before you write an offer.

How ARV Is Actually Calculated

ARV is not a guess — it is a comparable sales (comps) analysis, the same method an appraiser uses. The core process:

1. Pull 3-6 recently sold comps (typically within the last 3-6 months) within a half-mile to one mile of the subject property.
2. Match on the fundamentals: similar square footage (within roughly 10-20%), bed/bath count, lot size, age, and style.
3. Adjust each comp's sale price for differences — add value for features the comp has that your renovated property will not, subtract for features yours will have that the comp lacks.
4. Weight the adjusted comps toward the ones that are closest in size, condition, and distance — the best comps are the ones that need the fewest adjustments.
5. Land on a supportable value range, not a single magic number. Most experienced investors work in a range and price conservatively within it.

Where ARV Fits in Your Offer

Once you have a defensible ARV, it drives your maximum allowable offer (MAO). The widely used shorthand in the flipping world is the 70% rule:

MAO = (ARV × 70%) − Repair Costs

The 70% figure is a rule of thumb, not a law of physics — it exists to leave room for financing costs, closing costs on both ends, holding costs, and profit. Investors in competitive or low-margin markets sometimes work at 75-80% of ARV; more conservative investors in higher-risk markets work closer to 65%. Treat the percentage as a starting point to sanity-check a deal, then run your own numbers with your actual costs.

Illustrative Example (Round Numbers)

This is a simplified, illustrative example only — not a real transaction — to show how the pieces connect:

$250,000 × 0.70 = $175,000, minus the $40,000 repair budget = a $135,000 maximum offer. If the seller wants more than that, the deal needs to either get cheaper, need less rehab, or have a higher ARV than initially estimated — it does not mean you should stretch the offer and hope.

Common Ways Investors Get ARV Wrong

• Cherry-picking comps — using only the highest recent sales instead of the full, honest set of comparables.
• Ignoring condition — comparing your future renovated home to comps that were themselves fixer-uppers, or vice versa.
• Stale comps — relying on sales from 9-12+ months ago in a market that has since shifted.
• Skipping the drive-by — online comps miss things like a busy road, a power line easement, or a lot that backs up to commercial property.
• Over-improving for the block — a $500,000 renovation on a street where nothing has sold above $350,000 will not appraise at $500,000, no matter how nice the finishes are.

When in doubt, get a second opinion — a local real estate agent who actively lists in the neighborhood, or a licensed appraiser, can sanity-check your comps before you commit capital.