ARV Calculator: After-Repair Value and the 70% Rule

ARV stands for after-repair value — the price a property should sell for once the planned renovation is complete and the home is in typical retail condition for its submarket. Lenders on fix-and-flip and bridge programs size loans against ARV determined by an appraisal or broker price opinion, not by the borrower's estimate.

Take three to five recent sold comparables within roughly half a mile, closed in the last three to six months, similar in bedroom and bathroom count, square footage, and lot. Convert each to a price per square foot in renovated condition, adjust for material differences, then apply the adjusted average to your subject's finished square footage. Pending sales and active listings inform direction but are not comps.

The 70% rule says maximum offer = (ARV × 70%) − estimated rehab. The 30% haircut is meant to absorb holding costs, financing, selling costs, and profit. It is a screening filter, not underwriting: in low-price markets the fixed costs consume more than 30%, and in high-priced markets the rule can be conservative.

Fix-and-flip and bridge programs commonly cap at a percentage of purchase plus a percentage of the rehab budget, with an overall cap measured against ARV. The specific caps depend on the program, borrower experience, credit, and property. Any figures here are illustrative estimates and not an offer of credit or a commitment to lend.

No. Your ARV is an estimate. The appraised ARV is an opinion of value prepared by a licensed appraiser using a scope-of-work and the same comparable-sales approach, and it is what a lender will size against. Deals fail most often when the borrower's ARV was optimistic relative to the appraisal.

Skip distressed sales, foreclosures, short sales, and off-market wholesale flips, since these prices reflect seller duress rather than open-market retail value. Also avoid new construction unless the subject will be finished to a comparable spec, and avoid comps outside the same school zone or HOA if those factors move price locally.

Price per square foot compresses as homes get larger and expands for smaller homes, so applying one flat rate across very different sizes overstates or understates value. Pull comps closest to your subject's square footage and adjust the per-square-foot rate incrementally rather than linearly for big size gaps.

Yes. Draw-based fix-and-flip and bridge financing releases funds against completed work verified by inspection, and the total loan is capped relative to ARV regardless of how the borrower's estimate compares. If the appraised ARV comes in below the borrower's number, draws and the total loan amount are typically resized to the lower figure.

Because maximum offer is ARV times 70% minus rehab, every dollar of rehab overrun reduces your effective margin dollar for dollar rather than being absorbed elsewhere. Experienced flippers typically build a 10%–15% contingency into the rehab line before applying the rule so a change order does not erase the profit margin.

Yes. A resale ARV reflects retail buyer comps in finished, staged condition, while a rental exit is often underwritten off an as-repaired appraisal that also considers rent comparables for a DSCR refinance. Investors planning a BRRRR strategy should run both the resale ARV and the rental-appraisal value since a refinance lender will use its own appraisal.

Three comps is the practical minimum and five or more strengthens the estimate, especially in submarkets with wide price dispersion. Weight the most recent and most similar sales more heavily, and cross-check with any pending sales for directional confirmation even though pendings are not closed comps.

A low appraisal typically reduces the loan amount, since draw and total loan sizing are tied to the appraised ARV rather than the borrower's projection. Any figures from this calculator are illustrative estimates only, and actual loan terms remain subject to credit review, appraisal, and full underwriting.