How to Calculate ARV for a Fix-and-Flip (With a Real Example)
July 2026· 818 Capital Partners· 4 min read
What ARV Means
After Repair Value (ARV) is what a property will be worth once renovation is complete — the number every part of your deal depends on. Your maximum purchase price, your rehab budget ceiling, your loan proceeds, and your profit all flow from this single estimate. Get it wrong, and every other number in your deal is wrong too.
The Methodology — Not a Rule of Thumb
ARV is a comparable-sales (comps) analysis, the same approach an appraiser uses:
1. Pull 3–6 recent comps. Sold within the last 3–6 months, within roughly half a mile to a mile, similar in square footage (within 20%), bed/bath count, lot size, and — critically — condition after renovation, not as they currently sit.
2. Adjust for differences. If a comp has a garage and your subject property will not, adjust down. If a comp is on a busier street or has a better school district, adjust accordingly. Adjustments should be grounded in what similar features actually add or subtract in your specific market — not a generic percentage.
3. Calculate price per square foot on your adjusted comps, then apply that to your property's finished square footage. This is more reliable than averaging raw sale prices, especially when comps vary in size.
4. Cross-check against days-on-market and sale-to-list ratio. A comp that sold in 8 days at 102% of list price tells you something different than one that sat for 90 days and closed at 94% of ask — the second is a weaker data point even if the raw price looks similar.
A Real Example
Three-bedroom, two-bath single-family home, 1,450 sq ft, being fully renovated:
| Comp | Sold Price | Sq Ft | $/Sq Ft | Adjustment | Adjusted $/Sq Ft |
|---|---|---|---|---|---|
| A | $268,000 | 1,400 | $191 | +$5/sqft (no garage vs. subject's garage) | $196 |
| B | $275,000 | 1,500 | $183 | none | $183 |
| C | $255,000 | 1,380 | $185 | -$3/sqft (busier street than subject) | $182 |
Adjusted average: $187/sq ft
ARV = $187 × 1,450 sq ft = $271,150, rounded to $270,000 for underwriting purposes.
Why the 70% Rule Falls Short Here
The old shorthand — never pay more than 70% of ARV minus repairs — treats every deal the same regardless of actual carrying costs, hold time, or financing rate. We break down a fuller, deal-specific framework in [why the 70% rule no longer works](/insights/70-percent-rule-dead-2026): the real question is not a fixed percentage of ARV, but what purchase price still nets your target profit after financing, holding, and selling costs on this specific deal.
The Most Common ARV Mistakes
Put This to Work
If you have a property under contract and want a second opinion on ARV before you commit rehab dollars, [send us the address, your comps, and your rehab scope](/apply) — we will pressure-test the number before it becomes the foundation of a loan.
Frequently Asked Questions
What does ARV mean?
After Repair Value — what a property will be worth once renovation is complete. It determines your maximum purchase price, rehab budget ceiling, and loan proceeds.
How do you calculate ARV?
By pulling 3–6 recent comparable sales, adjusting for differences, then calculating price per square foot on the adjusted comps and applying it to your property’s finished square footage.
Is the 70% rule an accurate way to calculate a flip offer?
No — it is an oversimplified shorthand that ignores actual carrying costs, hold time, and financing rate. A deal-specific calculation based on real ARV and real costs is more reliable.
