After-Repair Value (ARV)
The estimated market value of a property after all planned renovations and repairs are complete.
What is After-Repair Value?
After-repair value (ARV) is the projected market value of a real estate property once all planned renovations, repairs, or improvements have been fully completed. It is the cornerstone metric for fix-and-flip investors and hard money lenders, who use it to assess whether a deal generates sufficient profit margin after acquisition and renovation costs. ARV is estimated using a comparative market analysis (CMA) of recently sold comparable properties in similar condition in the same area. The fundamental fix-and-flip formula is: Maximum Allowable Offer (MAO) = ARV × 70% − Estimated Repair Costs, with the 70% factor ensuring sufficient margin for holding costs, transaction fees, and profit.
Example
An investor identifies a distressed single-family home listed for $140,000. Comparable renovated homes in the neighborhood have sold for $250,000, establishing an ARV of $250,000. Using the 70% rule: MAO = ($250,000 × 70%) − $50,000 estimated repairs = $175,000 − $50,000 = $125,000. At the $140,000 asking price the deal exceeds the MAO, so the investor negotiates the purchase price down to $120,000, preserving sufficient margin to cover carrying costs and target a $30,000+ profit after the $50,000 renovation.