What Is ARV (After-Repair Value) and How Do You Calculate It?

ARV (after-repair value) is what a property will be worth once the planned renovation is finished. It is the single most important number in a fix and flip, because lenders size the loan against it and it sets your profit on exit.

How do you calculate ARV?

ARV is based on comparable sales, not on what you spend. The method:

• Pull 3 to 5 recent sold comps within about a mile that match the post-rehab condition, size, beds/baths, and style.
• Adjust for differences (an extra bath, a bigger lot, a finished basement).
• Land on a price per square foot the finished house will support, then multiply by your square footage.

A licensed appraiser does a formal version of this for the loan, but you should run your own before you offer.

Why does ARV matter to a lender?

Most fix and flip lenders cap total loan exposure at a percentage of ARV (often around 70%). That ceiling protects everyone: it keeps the loan well under the resale value so the deal still works if the market softens. If your purchase plus rehab pushes past that cap, you bring more cash or renegotiate.

The quick formula investors use

A common screen is the 70% rule: Max offer ≈ (ARV × 0.70) − rehab budget. It is a starting filter, not a substitute for real comps and a real budget.