What is ARV (After Repair Value)?
After Repair Value is the estimated market value of a distressed property after it has been fully renovated to comparable neighborhood standards. It's the cornerstone of every wholesale deal analysis, fix-and-flip investment, and BRRRR strategy.
Without an accurate ARV, you cannot calculate your Maximum Allowable Offer (MAO), assess your profit potential, or know whether a deal is worth pursuing. ARV is the single most important number in real estate investing.
How to Calculate ARV Step by Step
- Find comparable sold properties (comps) — Look for homes sold within the last 6 months, within 0.5 miles, with similar size and bed/bath count.
- Calculate price per square foot — Divide each comp's sale price by its square footage.
- Average the price per sqft — Add all price/sqft figures and divide by the number of comps.
- Multiply by your subject property's sqft — This gives your estimated ARV.
- Adjust for condition differences — A distressed comp sold at a discount should be adjusted upward. Use your judgment or an AI tool for precision.
ARV vs. As-Is Value
ARV assumes the property has been fully repaired. As-is value is what the property is worth in its current condition. Wholesalers buy at a discount to as-is value and sell to investors who profit from the spread between their acquisition cost and the ARV after rehab.
The 70% Rule and ARV
The most widely used formula in wholesale real estate: MAO = (ARV × 0.70) − Repair Costs. The 70% rule ensures the investor has enough margin to cover holding costs, selling costs, and profit. Some investors use 65–75% depending on their market and strategy.