What is ARV In Real Estate and How Do You Calculate It?

ARV, or after-repair value, is the estimated market value of a property once all planned repairs and renovations are complete. Real estate investors use ARV to decide the maximum price to pay for a fix-and-flip or BRRRR property and still profit. It is calculated either from comparable sales (comps) or as the property's current value plus the value of renovations.

Last updated: July 1, 2026. Originally published December 22, 2021.

Key takeaways

• ARV stands for after-repair value: the projected market value of a property after renovations are finished.
• There are two accepted ways to calculate ARV: from comparable sales (comps), or by adding the value of planned renovations to the property's current value.
• The 70% rule is a quick deal filter that sets your maximum bid: (ARV × 0.7) minus repair costs.
• Investors use ARV to set a maximum offer, size financing, and estimate resale or refinance value.
• ARV is only an estimate. It moves with the market and can be thrown off by repair-cost surprises, so treat it as a guide, not a guarantee.

ARV stands for after repair value. As the name suggests ARV in real estate is the calculation to determine the value of a property after repairs have been completed. This is an important metric for real estate investors as it allows them to determine the potential value of an investment property after repairs and calculate the maximum price they can pay for the property and still make a profit.

In order to calculate ARV, you must factor in local market conditions and the costs of the repairs that need to be undertaken. However, you won’t necessarily know exact costs and, due to external factors, the market can fluctuate significantly the resultant estimate isn’t always accurate.

In this article, we take a look at how exactly to calculate ARV, how you can use it to analyze potential investments, and what these limitations are.

What is the ARV formula?

There are two accepted methods for calculating ARV, and they answer slightly different questions. A complete estimate often uses both and cross-checks them.

Method 1 — Comparable sales (comps): ARV = average price per square foot of comparable sold properties × your property's square footage. Use this for a data-driven, appraisal-style estimate grounded in what similar homes actually sold for.

Method 2 — Value added: ARV = the property's current value + the value of planned renovations. Use this for a fast back-of-the-envelope check when you already know the current value and your projected renovation uplift.

Comps give the more defensible number because they reflect real transactions; the value-added method is quicker but relies on your estimate of how much the renovations actually add.

How do you calculate ARV for real estate?

If you want to purchase a “fixer-upper” property, one that requires renovations before selling or renting, you need to have an idea of the value the property will achieve after all the work is completed. You can hire an appraiser to do a comparative market analysis or you can do your own rough calculation.

Thankfully, the calculation itself is pretty straightforward if you want to do it yourself. Here’s what you need to do:

Do a market comparison

The first step is to get an accurate estimate of the property’s value by comparing it with like properties in the area. You can do this by analyzing five or six comparable properties (comps) in the area.

Look through multiple listing services or talk to local realtors to determine recent property sale prices. The properties you look at should be near to the property you’re analyzing and either still be on the market or have sold within the last 90-120 days. Prioritize properties that have similar features to the property’s projected state after repairs and renovation (rather than looking at properties in a similar state to the current condition).

What makes a valid comp?

Not every nearby sale is a useful comparison. A good comp should tick all of these boxes:

• In the same neighborhood as your property.
• Similar square footage and style (for example, a comparable single-family home rather than a condo).
• Similar age and construction.
• In similar condition to your property's projected post-renovation state.
• Sold within the last 90–120 days.

Calculate the price per square foot of the comps

Once you have a selection of similar properties, divide their sale price by their square footage to get a price per square foot of your comps. Do this comparison for each comp and then average the results by adding them all together and dividing by the number of properties. This will give you an average price per square foot of comparable properties in the area.

Apply the ARV Formula

The formula for calculating ARV is pretty simple.

ARV = avg. price per sq. ft. of comps × your property’s sq. ft.

For example, if the average price per square foot that you calculated was $150 and the property was 2000 square feet the ARV would be $300,000.

A worked example using the value-added method

The value-added method gets you to a quick estimate without pulling comps. Take the property's current value and add the value the planned renovations will create. For example, a property currently worth $180,000 needs $40,000 of renovations. Its ARV is $180,000 + $40,000 = $220,000.

ARV and the 70% rule

Once you have the estimated ARV of the property you can use it to estimate the maximum amount of money that you can pay for the property and still make an acceptable profit. This is where the 70% rule comes into play.

Estimate the cost of repairs

Estimating the potential cost of repairs and renovations can be a challenging thing to do. It’s a good idea to get several different independent contractors to survey the property.

By consulting with a few different contractors you can get several written estimates for the cost of the work and average the estimates to hopefully come to a realistic spend. Be sure to get an itemized list of each repair that includes both labor and material costs.

Related: Rental Property Accounting 101: Capital Improvements vs. Repairs

Using the 70% rule and ARV to determine the maximum bid price

House flippers and property resellers often operate with a 70% rule. Again, this is just a general estimating tool, but as a rule of thumb investors only buy a property if it is priced at no more than 70% of the after repair value minus the cost of the renovations. This maximum bid price is also called the Maximum Allowable Offer (MAO), the term you will most often see in fix-and-flip and BRRRR discussions.

The formula for the 70% rule including the ARV is

(ARV × 0.7) – estimated repair costs = maximum bid price (MAO).

An example

A real estate investor locates a potential property. They calculate the ARV to be $400,000 after all the designated repairs and renovations are concluded. They then estimate the total for all the repairs will cost $50,000. Using the above formula investors can calculate that the maximum amount they should pay for the property is ($400,000*0.7) – $50,000 = $230,000.

The limitations of using ARV

There are a few limitations to using this metric. First and foremost, it is only an estimate, the two major inputs, the property value and the cost of the repairs are often inaccurate and can change over time depending on various factors. Additionally, whilst comps can help inform you of the property’s valuation after repairs, estimating repair costs is more subjective.

ARV also doesn’t include unforeseen expenses. One thing that is especially true for older properties that are in need of significant repairs, is that there may be hidden issues. For example, there might be water damage that escapes the surveyor’s notice. Serious repairs may only be discovered once work has begun which will dramatically increase your repair costs.

ARV also leaves out holding and transaction costs. Property taxes, insurance, closing costs, and agent fees all eat into your margin but never appear in the ARV figure, so build them into your own numbers separately.

Finally, markets change. House prices can fluctuate from year to year or even month to month. If the market takes a turn for the worse, you may find that you need to hold on to the property for a while longer than planned, or you may end up selling the home for less than you anticipated.

Frequently asked questions

What does ARV stand for in real estate?

ARV stands for after-repair value. It is the estimated market value of a property once all planned repairs and renovations have been completed.

What is ARV in real estate?

ARV is the projected value of an investment property after it has been fully renovated. Investors use it to decide the maximum price to pay for a fix-and-flip or BRRRR deal while still leaving room for profit.

How do you calculate ARV?

There are two accepted methods. The comps method: multiply the average price per square foot of comparable sold homes by your property's square footage. The value-added method: add the value of your planned renovations to the property's current value. Comps give a more defensible number; value-added is a faster check.

What is the 70% rule in real estate?

The 70% rule says an investor should pay no more than 70% of a property's ARV minus the estimated repair costs. The formula is (ARV × 0.7) – repair costs = your maximum allowable offer. It is a quick filter to protect your profit margin, not a precise valuation.

What is a good ARV?

A good ARV is one that comfortably exceeds your total costs: purchase price, repairs, and holding and transaction costs combined. The wider that gap, the more margin you have if repairs run over or the market softens.

How do you find comps for ARV?

Pull recent sales from the MLS or ask a local real estate agent for comparable transactions. Focus on homes in the same neighborhood, of similar size, age, and style, that sold within the last 90–120 days and match your property's projected post-renovation condition.

Is ARV the same as market value?

No. ARV is the projected value of the property after renovations are complete. Current market value reflects the property in its present condition. The difference between the two is the value your planned repairs are expected to add.

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