What is After Repair Value (ARV)?
After Repair Value (ARV) is the projected market value of a property after all planned renovations are complete, based on recently-sold comparable properties in similar condition within a half-mile radius. It is the single most important number in any flip or BRRRR underwrite.
ARV is the cornerstone of every flip and BRRRR underwrite. Get it wrong and every downstream number — the 70% rule, the refi appraisal, the assignment fee — is wrong with it.
A defensible ARV comes from three to five comparable properties sold in the last 90 days within a half-mile of the subject, matched on bedrooms, bathrooms, square footage (±20%), age (±10 years), and condition (post-renovation, not as-is). Take the median, not the average — one outlier flip can drag the average by 10% or more.
Common ARV mistakes: comping to active listings instead of sold prices, ignoring days-on-market on the comps (a 120-day list-to-close at a haircut is not the same comp as a 5-day cash sale), trusting Zestimates, and failing to adjust for layout differences. Two 3-bed-2-bath houses at identical square footage can comp 15% apart based on whether the layout is open-concept or chopped up.
Subject: 1,400 sqft 3/2 ranch in good neighborhood. Three sold comps in last 90 days within 0.5 miles, all 1,300-1,500 sqft 3/2: $265,000, $278,000, $275,000. Median = $275,000. Apply a 5% stress-test discount → ARV underwrite = $261,250.
Concepts that connect.
The 70% rule is a flipper's underwriting heuristic: total all-in cost (purchase + rehab + carry + closing) should not exceed 70% of the property's After Repair Value. The remaining 30% covers profit, slippage, and the cost of being wrong.
Maximum Allowable Offer (MAO) is the highest price a wholesaler or flipper can pay for a property and still hit their required profit margin. Derived from the 70% rule: MAO = (ARV × 0.70) − repair costs − assignment fee.
Comparable sales (comps) are recently-sold properties similar to a subject property, used to estimate market value. A defensible comp set has three to five sales in the last 90 days within a half-mile, matched on bedrooms, bathrooms, square footage (±20%), age (±10 years), and condition.
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a real-estate investing strategy where an investor buys a distressed property cheap, renovates it, rents it out, refinances at the improved appraisal to recover most or all of the original capital, then repeats the process with the recovered capital.
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