What is After Repair Value (ARV)?

ARV stands for After Repair Value. It represents what your property will be worth after you complete all planned renovations. For house flippers, ARV determines your potential profit. For BRRRR investors, ARV determines how much you can refinance and pull out.

ARV is calculated by analyzing comparable sales - recently sold properties that are similar to what your property will be after renovation. The key is finding comps that match your finished product, not the current distressed condition.

Step-by-Step: How to Calculate ARV

Step 1: Define Your Finished Product

Before pulling comps, know exactly what your renovated property will look like:

• Square footage (will you add any?)
• Bedroom and bathroom count
• Finish level (builder grade, mid-range, high-end)
• Key features (granite counters, hardwood floors, updated bathrooms)
• Garage, basement, lot size

Your comps need to match this finished profile, not your property current condition.

Step 2: Find Comparable Sales

Use MLS, Zillow, Redfin, or your local assessor database to find recently sold properties. Good comps should meet these criteria:

• Location: Within 0.5-1 mile (same neighborhood is ideal)
• Recency: Sold within last 3-6 months (3 months is best)
• Size: Within 200 square feet of your property
• Bedrooms/Baths: Same count, or make adjustments
• Condition: Similar to your planned finish level
• Style: Same property type (ranch, two-story, etc.)

Aim for 3-5 solid comps. More is better if they are truly comparable.

Step 3: Calculate Price Per Square Foot

For each comp, divide the sale price by the square footage:

Step 4: Make Adjustments

No two properties are identical. Adjust for differences:

• Extra bedroom: +$10,000 to $20,000
• Extra bathroom: +$5,000 to $15,000
• Garage (1-car): +$10,000 to $20,000
• Finished basement: +$15,000 to $30,000
• Pool: +$10,000 to $25,000 (or negative in some markets)
• Larger lot: +$5,000 to $20,000
• Busy street: -$10,000 to $20,000

If your subject has a feature the comp lacks, add value. If the comp has a feature your subject lacks, subtract value.

Step 5: Calculate Final ARV

Apply your average price per square foot to your subject property, then add or subtract adjustments:

Common ARV Mistakes to Avoid

Mistake 1: Using Asking Prices Instead of Sold Prices

Asking prices mean nothing. A seller can list their property at any price they want. Only use actual sold prices - these represent what buyers actually paid.

Mistake 2: Using Comps That Are Too Old

Markets change. A comp from 12 months ago may not reflect current values. Stick to 3-6 months, and weight more recent sales more heavily.

Mistake 3: Using Comps From Different Neighborhoods

Property values can vary dramatically block by block. A comp one mile away across a highway might be in a completely different price tier. Know your micro-market.

Mistake 4: Overestimating the Impact of Your Renovations

Your beautiful new kitchen does not automatically add $50,000 in value. You are limited by what buyers pay for similar homes in the area. If no homes in the neighborhood sell for over $300,000, you are unlikely to get $350,000 no matter how nice your rehab is.

Mistake 5: Emotional Attachment

When you want a deal to work, it is tempting to stretch your ARV estimate. Always be conservative. If you think ARV is $300,000, run your numbers at $280,000. You will thank yourself if the appraisal comes in low.

ARV Resources and Tools

Use multiple sources to verify your ARV estimate:

• MLS (via agent): Most accurate sold data
• Zillow/Redfin: Good for initial research
• County assessor: Official records
• PropStream/DealMachine: Investor-focused tools
• Local appraisers: Pay for a professional opinion on large deals

When to Get a Professional Appraisal

For deals over $50,000 profit potential, consider paying $300-500 for a professional appraisal before purchasing. An appraiser can identify issues you might miss and give you confidence in your numbers.

Remember: you will need an appraisal anyway if you are refinancing (BRRRR) or if your buyer is using a mortgage. Better to know early if your ARV assumptions are off.