How to Calculate ARV (After Repair Value) for a Rehab Property
If you’re investing in real estate—whether it’s flipping houses, wholesaling, or using the BRRRR method—one of the most important numbers you need to know is the ARV, or After Repair Value. This simple but powerful metric tells you what a property will likely be worth after all renovations are completed. Without an accurate ARV, you risk overpaying, underestimating your profit, or worse—losing money on your deal.
In this guide, we’ll break down everything you need to know about how to calculate ARV, why it matters, what tools to use, and how to avoid common mistakes. Let’s dive in.
🔍 What is ARV (After Repair Value)?
ARV stands for After Repair Value. It represents the estimated value of a property after all renovations, upgrades, and improvements are complete.
For example:
- A distressed home may be worth $100,000 now.
- After a $40,000 rehab, it could be worth $180,000.
- That $180,000 is the ARV.
Knowing this number helps investors:
- Estimate maximum allowable offer (MAO)
- Attract cash buyers or lenders
- Calculate potential profit margins
📊 ARV Calculation Formula
Here’s a simple formula:
ARV = Average Price of Comparable Homes (Comps) in the Area
But it’s not as simple as just picking any house nearby. You’ll need to select the right comps, adjust for features, and apply real estate judgment.
✅ Step-by-Step: How to Calculate ARV for a Rehab Property
1. Find Comparable Properties (Comps)
Look for 3–5 recently sold properties that are:
- Within 0.5 to 1 mile
- Sold in the last 3–6 months
- Similar in size (within 15% of square footage)
- Same bed/bath count
- Same year built range
- In similar condition to what your property will be after repairs
2. Use the Right Tools
Here are some tools to help you pull comps:
- Rehab Valuator – Built-in ARV comp feature
- PropStream – Investor-focused comp pulling
- Zillow/Redfin – Free but less investor-specific
- MLS – If you’re an agent or have access
3. Adjust for Differences
If your subject property has:
- An extra bathroom
- A garage or pool
- More square footage
…then adjust your comp prices up or down. Use industry averages (e.g., $5,000 for a bathroom, $20/sq ft for extra living space).
Example:
- Comp 1: Sold for $190,000 (same size)
- Comp 2: Sold for $200,000 (has a pool)
- Comp 3: Sold for $185,000 (needs updates)
After adjusting:
- Comp 1 = $190,000
- Comp 2 = $195,000 (adjust down $5K for pool)
- Comp 3 = $190,000 (adjust up $5K for updates)
Average ARV = $191,667
4. Confirm with a Realtor or Appraiser
If possible, double-check your comps with:
- A local real estate agent
- An appraiser (for larger projects)
This ensures accuracy and can help if you’re presenting the ARV to lenders or partners.
🧮 How ARV Impacts Your Offer Price
Investors use ARV to reverse-engineer their offer using the 70% Rule:
Max Offer = ARV x 70% – Repair Costs
Example:
- ARV = $200,000
- Repair Costs = $40,000
- Max Offer = $200K x 0.7 – $40K = $100,000
If you buy the house for $100,000, you have room to:
- Cover closing costs
- Pay contractors
- Make a profit
📉 Mistakes to Avoid When Calculating ARV
- Using Active Listings Instead of Solds Sold properties show real value. Active listings are just wishful thinking.
- Comparing Unrenovated Homes to Your Finished Product Make sure your comps reflect the after-repair condition.
- Using Outdated or Far-Away Comps Stay within 1 mile and 6 months for relevant data.
- Forgetting to Adjust for Major Differences Add or subtract value for extra bathrooms, garages, lot size, and other features.
💡 Tools That Make Calculating ARV Easy
If you want to simplify this process, here are top tools used by professionals:
🛠️ Rehab Valuator
- Pull ARV comps in-app
- Auto-calculate MAO
- Build reports for buyers and lenders
- Great for flippers, wholesalers, BRRRR investors
🔎 PropStream
- Access nationwide property data
- Filter by owner, equity, comps, and more
📱 DealMachine
- Great for Driving for Dollars + Comp analysis
🧠 Pro Tips for Maximizing ARV Accuracy
- Always use at least 3 solid comps
- Focus on the after-repair condition
- Keep a comp adjustment cheat sheet
- Run ARV scenarios (low/mid/high) to stress test the deal
- Have a second set of eyes review your numbers
🏁 Final Thoughts: Mastering ARV = Mastering Profits
Learning how to calculate ARV is one of the most important skills in real estate investing. It sets the foundation for every offer, every negotiation, and every profit margin.
Whether you’re flipping your first house or managing multiple rehabs, use the strategies and tools outlined in this article to analyze with confidence.
👉 Ready to analyze deals like a pro? Try our favorite tool: Rehab Valuator – Free 14-Day Trial
Your profit starts with knowing your numbers. Now you know how.
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