ARV (After-Repair Value)
The projected market value of a property once renovations are complete. ARV drives how much a fix-and-flip or BRRRR lender will advance on a rehab deal.
After-repair value (ARV) is the estimated market value of a property after a planned renovation is finished. It answers the question every flipper and BRRRR investor asks first: what will this be worth when I'm done?
ARV is the anchor of rehab lending. A fix-and-flip or hard money lender sizes the loan against ARV because the finished value — not the distressed purchase price — is what protects the loan if the borrower defaults mid-project.
How ARV is determined
ARV comes from comparable sales (comps) — recent sales of similar, fully-renovated homes in the same neighborhood, adjusted for size, condition, and features. Lenders order an appraisal (often a "subject-to" appraisal that values the home as if the scope of work were already complete) or a broker price opinion to confirm the investor's ARV before funding.
The 70% rule
A classic flipper rule of thumb caps the all-in purchase price at 70% of ARV minus repairs:
Max Offer = (ARV × 0.70) − Repair Cost
On a property with a $300,000 ARV and $40,000 of repairs:
Max Offer = (300,000 × 0.70) − 40,000 = $170,000
The 30% spread covers financing, holding costs, selling costs, and profit. Lenders use a similar discipline: most cap total loan exposure at roughly 70–75% of ARV.
ARV in the BRRRR strategy
In BRRRR (Buy, Rehab, Rent, Refinance, Repeat), ARV determines the cash-out refinance. If you buy and rehab for $170,000 and the ARV is $300,000, a 75% LTV DSCR refinance lends $225,000 — recovering your capital and leaving the property in your portfolio.
Why accuracy matters
An inflated ARV is the most common way flip deals lose money. If your $300,000 ARV appraises at $270,000, every downstream number — loan size, profit, refinance proceeds — shrinks. Pull conservative comps, and expect the lender's appraiser to do the same.
Frequently asked questions
Who decides the ARV on my loan?
You estimate ARV from comps when you underwrite the deal, but the lender confirms it with an independent appraisal or broker price opinion before funding. The lender lends against its own appraised ARV, not your estimate.
What's the 70% rule in house flipping?
It's a guideline that your total purchase price plus repairs should not exceed 70% of ARV: Max Offer = (ARV × 0.70) − Repairs. The remaining 30% covers financing, carrying costs, selling costs, and profit.
How is ARV different from as-is value?
As-is value is what the property is worth in its current, often distressed condition. ARV is what it will be worth after the renovation. Fix-and-flip lenders care about both — as-is value caps the initial advance, ARV caps total exposure.