How to Calculate ARV (After Repair Value): The Complete Guide

Every profitable real estate deal starts with one number: ARV.

Get it right, and you make money. Get it wrong, and you lose thousands.

Here's exactly how to calculate ARV like a pro.

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What Is ARV?

ARV (After Repair Value) is the estimated market value of a property after all planned repairs, renovations, and improvements are completed.

It's not:

• Current value (as-is condition)
• Purchase price + renovation costs
• What you hope it's worth

It IS:

• What similar fully renovated homes recently sold for
• Based on actual comparable sales, not guesses
• The foundation for determining your maximum offer price

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Why ARV Matters

ARV determines:

✅ How much to offer (using the 70% rule) ✅ How much profit you'll make (ARV minus all costs) ✅ How much you can borrow (lenders use ARV for loan-to-value) ✅ Whether the deal makes sense (before you waste time)

Without accurate ARV, you're guessing—and guessing costs money.

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The ARV Formula

Method 1: Comparable Sales Average (Most Accurate)

ARV = Average sale price of comparable renovated properties

This is the gold standard. Find 3-6 similar renovated homes that recently sold, average their prices.

Method 2: Price Per Square Foot

ARV = Comparable $/sq ft × Subject property square footage

Useful when comps vary in size.

Method 3: Simple Addition (LEAST Accurate)

ARV = Current value + Value of renovations

Only use this as a rough starting point. Real ARV comes from comps.

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Step-by-Step: How to Calculate ARV

Step 1: Define Your Finished Product

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

• Number of bedrooms/bathrooms
• Square footage
• Finishes (granite counters, hardwood floors, etc.)
• Condition (move-in ready, fully updated)
• Features (garage, pool, etc.)

Why this matters: You're comparing your property to homes in similar post-renovation condition, not current condition.

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Step 2: Find Comparable Properties (Comps)

What makes a good comp:

✅ Sold within last 3-6 months (recent data) ✅ Within 0.5-1 mile (same neighborhood) ✅ Similar size (±15-20% square footage) ✅ Same bed/bath count (or ±1) ✅ Similar condition (updated, not fixer-uppers) ✅ Same property type (SFR to SFR, not SFR to condo)

Where to find comps:

• MLS (if you have agent access)
• Zillow, Redfin (sold listings, not active)
• PropStream, BatchLeads (paid tools)
• County records (public data)
• Local real estate agents

Pro tip: Need at least 3 comps, ideally 5-6 for accuracy.

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Step 3: Adjust for Differences

No two properties are identical. Adjust comp prices based on differences:

Add value if YOUR property has:

• Extra bedroom/bathroom
• Larger square footage
• Better location
• Pool, garage, etc.

Subtract value if comps have:

• Features your property lacks
• Larger size
• Better condition

General adjustment values:

• Bedroom: +/- $10K-$20K
• Bathroom: +/- $8K-$15K
• Garage: +/- $15K-$25K
• 100 sq ft: +/- $10K-$15K

Example:

Your property: 3 bed, 2 bath, 1,500 sq ft
Comp #1: 3 bed, 2 bath, 1,600 sq ft, sold for $250K

Adjustment: -$10K for extra 100 sq ft
Adjusted value: $240K

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Step 4: Calculate Average ARV

Example calculation:

Comp #1: $245,000 (adjusted)
Comp #2: $252,000 (adjusted)
Comp #3: $238,000 (adjusted)
Comp #4: $250,000 (adjusted)
Comp #5: $248,000 (adjusted)

Average: ($245K + $252K + $238K + $250K + $248K) ÷ 5 = $246,600

Your ARV: $246,600 (round to $245K-$250K for safety)

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Using Price Per Square Foot

If comps vary in size, calculate ARV using $/sq ft:

Step 1: Calculate $/sq ft for each comp

Comp #1: $250,000 ÷ 1,600 sq ft = $156/sq ft
Comp #2: $240,000 ÷ 1,550 sq ft = $155/sq ft
Comp #3: $255,000 ÷ 1,650 sq ft = $155/sq ft

Average: $155/sq ft

Step 2: Apply to your property

Your property: 1,500 sq ft × $155/sq ft = $232,500 ARV

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The 70% Rule: Using ARV to Determine Maximum Offer

Once you have ARV, use the 70% Rule to calculate your maximum offer:

Maximum Allowable Offer (MAO) = (ARV × 70%) - Repair Costs

Example:

• ARV: $250,000
• Estimated repairs: $40,000

MAO = ($250,000 × 0.70) - $40,000 = $135,000

Don't pay more than $135,000 for this property.

Why 70%?

The 30% covers:

• Your profit (10-15%)
• Holding costs (2-4%)
• Closing costs buy + sell (4-6%)
• Selling costs/realtor fees (6%)
• Contingency buffer (3-5%)

Adjust based on your market:

• Hot markets: 75-80%
• Risky markets: 65%
• Competitive markets: 72-75%

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Common ARV Mistakes (And How to Avoid Them)

Mistake #1: Using Active Listings Instead of Sold Comps

Wrong: Zillow shows houses listed at $275K
Right: Use houses that sold at $250K

Fix: Filter for "Sold" not "For Sale"

Mistake #2: Using Old Comps

Wrong: Using sales from 12 months ago
Right: Use sales from last 3-6 months

Fix: Markets change. Recent data only.

Mistake #3: Comparing to Fixer-Uppers

Wrong: Using distressed property sales as comps
Right: Compare to fully renovated homes

Fix: Make sure comps are updated, not as-is condition

Mistake #4: Ignoring Location Differences

Wrong: Using comps from 2 miles away in different neighborhood
Right: Stay within 0.5-1 mile radius

Fix: Neighborhood matters. Stay hyperlocal.

Mistake #5: Overestimating Your Finishes

Wrong: Assuming your granite counters = luxury finishes
Right: Match your planned finishes to comp finishes

Fix: Be honest about finish quality

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When to Get Professional Help

Hire an Appraiser When:

• You're new to investing (learning curve)
• Property is unique (no good comps)
• Lender requires it (refinance, hard money)
• Deal is large ($500K+)

Cost: $300-$600

Work with a Real Estate Agent When:

• You don't have MLS access
• You want Comparative Market Analysis (CMA)
• Agent knows the neighborhood well

Cost: Free (if you buy through them)

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Texas-Specific ARV Considerations

DFW Market

• Suburban vs urban ARV varies 30-40%
• New construction comps inflate ARV
• Foundation issues lower ARV $10K-$30K

Houston Market

• Flood zone status impacts ARV
• Energy corridor vs suburbs = different comps
• Use 6-month comps (market volatility)

Austin Market

• Tech boom inflates ARVs quickly
• Use 3-month comps maximum
• Downtown vs suburbs = massive differences

San Antonio Market

• Military bases create stable ARVs
• Lower price points = tighter margins
• Medical district vs other areas

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ARV Checklist

☐ Define post-renovation specs
☐ Find 3-6 comparable properties
☐ Confirm comps sold in last 3-6 months
☐ Verify comps within 0.5-1 mile
☐ Check bed/bath/sq ft match
☐ Adjust for differences
☐ Calculate average sale price
☐ Calculate $/sq ft (if needed)
☐ Determine final ARV
☐ Apply 70% rule for maximum offer
☐ Factor in repair costs
☐ Calculate potential profit

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Real-World ARV Example

Property: 3/2 house, 1,400 sq ft, needs full cosmetic rehab

Step 1: Find comps

• Comp #1: 3/2, 1,450 sq ft, sold $242K
• Comp #2: 3/2, 1,380 sq ft, sold $235K
• Comp #3: 4/2, 1,500 sq ft, sold $255K
• Comp #4: 3/2, 1,420 sq ft, sold $248K

Step 2: Adjust

• Comp #3: -$15K (extra bedroom) = $240K adjusted

Step 3: Average ($242K + $235K + $240K + $248K) ÷ 4 = $241,250

ARV: $240,000 (conservative)

Step 4: Calculate MAO Repair estimate: $35,000

MAO = ($240,000 × 0.70) - $35,000 = $133,000

Decision: Don't pay more than $133K

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The Bottom Line

ARV isn't a guess—it's a calculation.

Use recent comps, adjust for differences, be conservative.

Accurate ARV = profitable deals.

PropPipeline shows estimated ARV on every listing, so you can analyze deals faster and make confident offers.

Ready to find deals with built-in ARV estimates?

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