Every profitable flip starts with one number: the after-repair value. Get it right and the rest of the deal falls into place — your offer, your budget, your loan, and your margin. Get it wrong and you've either overpaid for a property or walked away from one you should have bought. Learning how to calculate ARV accurately is the single most important skill a fix and flip investor can develop.
ARV, or after-repair value, is what a property will be worth once renovations are complete and it's ready to sell at full market value. It isn't what you paid, and it isn't what the property is worth today in its current condition. It's the finished number — the price a buyer will pay for the fully rehabbed home — and it's the figure that drives nearly every decision in the deal.
It's also the number your lender cares about most. At Funded Capital, ARV determines how much we'll advance on a fix and flip loan, because it represents your exit. This guide walks through exactly how to calculate ARV step by step, the rules professionals use to pick comparable sales, and how that single figure flows through to your loan amount and your profit.
What ARV Actually Means
After-repair value is a forward-looking appraisal. You're estimating what the property will sell for after the work is done, based on what similar, already-renovated homes in the same area have recently sold for. The keyword is comparable — your ARV is only as reliable as the sales you anchor it to.
This is fundamentally different from the current "as-is" value. A tired three-bedroom that needs a full cosmetic rehab might be worth $300,000 today and $420,000 once it's finished to the standard of the neighborhood. That $420,000 is your ARV, and it's the number that tells you whether the deal works.
Why ARV Drives Everything
ARV sets your maximum offer, frames your renovation budget, and caps your loan. Because it represents the resale price, it's the ceiling on your profit and the basis on which a lender measures risk. A well-supported ARV with a realistic rehab scope is the easiest kind of deal to underwrite and fund. An inflated ARV is the fastest way to lose money — or to have an application slowed or declined.
The ARV Formula
The core calculation is refreshingly simple:
ARV = Current Value of Comparable Renovated Homes (per square foot) × Subject Property Square Footage
In practice, you find recently sold, fully renovated homes that closely match your property, calculate their average sale price per square foot, and multiply by your home's square footage. From there, you adjust for meaningful differences — an extra bathroom, a garage, a larger lot, a better street.
A Worked Example
Say your subject property is 1,800 square feet. You pull three recently sold, renovated comps in the same neighborhood:
| Comparable | Sale Price | Square Footage | Price per Sq Ft |
|---|---|---|---|
| Comp 1 | $415,000 | 1,750 | $237 |
| Comp 2 | $432,000 | 1,850 | $234 |
| Comp 3 | $408,000 | 1,720 | $237 |
| Average | — | — | $236 |
Multiply the average price per square foot by your home's size:
$236 × 1,800 = $424,800 ARV
That $424,800 is your baseline after-repair value. If your subject has a feature the comps lack — say, a finished garage or an extra half-bath — you'd adjust upward modestly. If it's missing something the comps have, you'd adjust down. Run your final numbers through our loan calculator to see how they translate into leverage and margin.
How to Pick the Right Comparables
Comp selection is where most ARV mistakes happen. The closer your comps match the subject property in location, size, condition, and timing, the more accurate your estimate. Use these rules to keep your number honest.
Location
Pull comps from the same neighborhood — ideally within half a mile, and never across a boundary that changes value, like a different school zone, a busier road, or a different municipality. In dense urban markets, even a few blocks can shift price per square foot meaningfully.
Recency
Use sales from the last three to six months. Real estate moves, and a comp from a year ago may not reflect today's market. The more recent the sale, the more reliable the signal. In a fast-moving market, lean toward the most recent closings.
Condition
This is the one investors most often get wrong: your comps must be renovated homes, finished to a similar standard as your planned rehab. Comparing your finished flip to as-is or distressed sales will badly understate your ARV. You want to know what fully updated homes are selling for, because that's what you'll be selling.
Size and Features
Stay within roughly 20% of your subject's square footage, and match bedroom and bathroom counts where you can. Price per square foot is not perfectly linear — a 1,000-square-foot home and a 2,500-square-foot home can have very different per-foot values — so keeping comps close in size protects your accuracy.
The 70% Rule and How ARV Sets Your Offer
Once you have a reliable ARV, the 70% rule gives you a fast way to find your maximum offer. The rule says you should pay no more than 70% of ARV minus your renovation costs:
Maximum Offer = (ARV × 0.70) − Repair Costs
Using our example, with a $424,800 ARV and an estimated $60,000 rehab:
($424,800 × 0.70) − $60,000 = $297,360 − $60,000 = $237,360 maximum offer
The 30% spread between ARV and your all-in basis is what covers your financing costs, closing costs on both ends, holding costs, selling commissions, and — critically — your profit. The 70% rule is a screening tool, not gospel; experienced investors in hot markets sometimes stretch it, and conservative investors tighten it. But it's a reliable first filter for whether a deal is worth pursuing.
How ARV Determines Your Loan Amount
Your lender uses ARV to set a ceiling on how much they'll lend, alongside loan-to-cost limits. Two ratios govern fix and flip leverage: loan-to-cost (LTC), which measures the loan against your total project cost, and loan-to-ARV, which measures the total loan against the finished value.
Funded Capital lends up to 90% of cost, and we cap total leverage at a percentage of ARV to keep the deal safe for both sides. That's why a strong, well-documented ARV directly increases your borrowing power — the higher and better-supported the finished value, the more we can confidently advance. For a deeper look at what we underwrite, see our guide to fix and flip loan requirements, and learn how to calculate ARV's cousin metric, DSCR, if you're planning to refinance and hold.
This is also why inflated ARVs backfire. When the resale comes in below an unrealistic estimate, the margin that was supposed to be profit disappears. A disciplined ARV protects your equity and your relationship with your lender.
Calculate Your Numbers, Then Get Funded Fast
Funded Capital is a Miami-based private lender built for investors who need to move quickly on strong deals. We finance fix and flip loans from 8.75% with up to 90% loan-to-cost, and we lend across 44 states. We underwrite the deal — the purchase price, the renovation budget, and the after-repair value — not your tax returns.
Term sheets in two hours. Closings in as little as five days. No income verification on most programs. When you've run your ARV and the deal works, we move at the speed a competitive market demands.
Or call us directly: (305) 857-5620 | processing@fundedcapital.com
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Frequently Asked Questions
How do you calculate ARV?
To calculate ARV, find recently sold, fully renovated homes comparable to your property in the same neighborhood, calculate their average sale price per square foot, and multiply by your property's square footage. Then adjust for meaningful differences in features, lot size, or condition. The result is your after-repair value — what the property should sell for once your rehab is complete.
What is the 70% rule in ARV?
The 70% rule states that an investor should pay no more than 70% of a property's ARV minus the cost of repairs. For example, on a property with a $400,000 ARV and $50,000 in repairs, your maximum offer would be $230,000. The 30% spread covers financing, closing, holding, and selling costs while leaving room for profit. It's a screening tool, not an absolute limit.
How many comps do I need to calculate ARV?
Aim for at least three recently sold, renovated comparables, and ideally more. The comps should be within about half a mile, sold in the last three to six months, similar in size (within roughly 20% of your square footage), and finished to a standard close to your planned rehab. More high-quality comps produce a more reliable ARV.
Why does ARV matter for a fix and flip loan?
ARV represents your exit — the price at which you'll sell the finished property — so lenders use it to set a ceiling on how much they'll advance. Funded Capital underwrites the deal based on purchase price, renovation budget, and after-repair value, lending up to 90% of cost. A strong, well-supported ARV increases your borrowing power, while an inflated one can slow or sink an application. Apply now to see what your deal qualifies for.
What's the difference between ARV and current market value?
Current (or "as-is") market value is what a property is worth in its present condition. ARV is what it will be worth after renovations are complete. The gap between the two — minus your repair costs — is where a flip's profit lives. A property might be worth $300,000 as-is and $420,000 after repairs; that $420,000 is the ARV.