What Is After Repair Value (ARV)? Definition & Formula

After Repair Value is the single number that determines whether a real estate investment deal works. Here's exactly what it means, how it's calculated, and why it matters.

After Repair Value (ARV): Simple Definition

After Repair Value (ARV) is the estimated market value of an investment property after all planned renovations have been completed.

In plain terms: ARV answers "What will this property sell for once it's fixed up?"

A house might sell for $90,000 in its current distressed state. After a $50,000 renovation, the same house might sell for $200,000. The $200,000 is the ARV.

The ARV Formula

ARV itself isn't a formula — it's an estimate based on comparable sales. But ARV feeds into the most important formula in real estate investing:

Maximum Allowable Offer (MAO) = (ARV × 0.70) − Estimated Rehab Costs

Example: ARV of $200,000 with Rehab of $40,000:

($200,000 × 0.70) − $40,000 = $140,000 − $40,000 = $100,000 Maximum Allowable Offer

How ARV Is Determined

ARV is calculated using comparable sales — recently sold, fully renovated properties similar to your subject property in size, location, bedroom/bath count, and style.

Find 3–5 comparable sold properties within 0.5–1 mile
Filter for sales in the last 3–6 months in renovated or updated condition
Calculate price per square foot for each comp
Adjust for meaningful differences (extra bathrooms, garage, lot size, etc.)
Apply the adjusted price per sqft to your property's square footage

Why ARV Is the Most Important Number in Real Estate Investing

Fix-and-flip: ARV is your projected resale price — it determines how much you can pay and how much you'll profit
BRRRR: ARV determines your refinance ceiling (typically 70–75% of ARV) and how much capital you can recycle
Wholesale: Your assignment fee depends on the gap between your contract price and 70% of ARV for the end buyer
Hard money financing: Most hard money lenders base loan amounts on ARV (typically 65–70% of ARV)

ARV vs. Appraised Value

ARV: Pre-purchase estimate made by the investor to determine deal viability
Appraised Value: Official estimate from a licensed appraiser, typically ordered by a lender at time of purchase or refinance

ARV is an investor's working estimate. Appraised value is what the lender relies on. If your ARV estimate significantly differs from the appraisal, you have a problem — which is why accurate comp selection matters.

What Causes ARV to Change

Market conditions: Rising or falling markets affect what comps support
Renovation scope: If you add a bathroom or convert an attic, ARV increases
Time elapsed: Comps age — a 6-month-old comp is less reliable than a 30-day comp
Comp quality: Your ARV is only as good as the comps you selected