After Repair Value (ARV) is the estimated market value of a real estate property assuming a specific set of renovations has been completed. It is the foundational number in fix-and-flip underwriting: every other variable in the deal — acquisition price, rehab budget, financing terms, and projected profit — is sized relative to ARV.
How ARV Is Determined
ARV is not an appraised value in the formal sense. It is a projection, typically assembled by comparing the subject property — as it will look after renovation — to recently sold properties that are already in renovated condition. These are called post-renovation comparable sales, or "comps." The analyst selects comps within a reasonable radius (often half a mile to one mile in urban markets, wider in rural ones), then adjusts for differences in square footage, bedroom and bathroom count, lot size, age, and finish quality.
The reliability of an ARV estimate is only as good as the comparables used. A common mistake is using comps that are geographically close but functionally dissimilar — for example, comparing a gut-renovated single-family home to a cosmetically updated condo in the same zip code. The condition at time of sale matters as much as location.
The 70% Rule
The 70% rule is the most widely cited heuristic in fix-and-flip analysis. It states:
Maximum Acquisition Price = (ARV × 0.70) − Estimated Repair Costs
The rule is designed to leave room for holding costs, financing costs, selling costs (typically 6–8% of ARV when accounting for agent commissions, closing costs, and concessions), and a profit margin. At a 70% factor, the investor is targeting a gross margin of roughly 30% of ARV before accounting for the above-the-line costs.
The 70% rule is a filter, not a substitute for full underwriting. In high-cost markets where properties transact at thin margins, investors sometimes operate at 75–80% of ARV. In markets with longer hold times or higher renovation risk, 65% or lower may be appropriate. The rule's value is speed: it allows rapid triage of leads before investing time in detailed analysis.
ARV in Lending
Hard money lenders and private lenders frequently structure rehabilitation loans as a percentage of ARV rather than a percentage of purchase price. A lender offering 70% of ARV, for instance, will advance funds covering both the acquisition and a portion of the renovation draws — provided the purchase price plus repairs stays within that ceiling. This structure aligns the lender's collateral position with the completed value of the asset, not the distressed entry price.
Loan-to-ARV (LTARV) is distinct from loan-to-value, which references current as-is value. Investors should be precise about which metric a lender is using when evaluating financing terms.
AI-Assisted ARV Estimation
Several software tools now automate parts of the ARV estimation workflow. Platforms like ACC AI Deal Assistant and The Offer Haus pull comparable sales data and apply automated adjustments to produce rapid ARV estimates at scale, which is useful when evaluating large volumes of leads. Remodel AI addresses the cost side of the equation, providing renovation cost estimates that feed directly into deal analysis alongside ARV projections.
For portfolio-level analysis and deal screening across multiple markets, REI Litics offers aggregated deal metrics including projected post-renovation value comparisons.
The limitation of automated ARV tools is data latency and the difficulty of capturing hyperlocal factors. A machine learning model trained on MLS transactions will not know that a specific block has a noise issue, that a new commercial development nearby is influencing buyer sentiment, or that a particular finish level is overshooting what the market will support. Investors who use automated ARV tools effectively treat them as a first pass, then apply local knowledge in a second review.
ARV vs. Appraised Value
An appraisal performed by a licensed appraiser is a formal opinion of value, subject to USPAP (Uniform Standards of Professional Appraisal Practice) standards. ARV estimates produced for internal underwriting are not appraisals. When a lender requires a formal ARV for loan underwriting purposes, they will typically order a "subject-to appraisal" — an appraisal that values the property as if the renovation scope described in the scope of work has already been completed. This is a different product from a standard appraisal and generally costs more.
Common Errors in ARV Estimation
Using pre-renovation comps. If the comparable sales used to estimate ARV were sold in distressed condition, the ARV will be understated. The comps must reflect the finished product.
Overestimating finish quality relative to the market. Installing high-end finishes in a neighborhood where buyers are not paying for them will not produce an ARV that reflects those costs. ARV is set by buyer demand, not by renovation spend.
Ignoring time on market. ARV is an estimate of what the property can sell for, but when it will sell matters too. A slower absorption rate in the local market extends holding costs and reduces realized profit, even if the sale price matches ARV.
Stale data. In markets with rapid price movement, comps from six months ago may meaningfully misrepresent current buyer behavior. This is one area where automated valuation model tools can help, since they update more frequently than manually assembled comp sets.
For a broader look at how technology is reshaping the investment analysis workflow, the 2026 guide to AI tools in real estate covers the current tool landscape across deal sourcing, underwriting, and asset management.
Summary
ARV is the reference point around which fix-and-flip math is built. It determines maximum acquisition price under the 70% rule, sets the ceiling for rehabilitation loan sizing, and defines the profit target. A well-supported ARV requires disciplined comp selection, honest assessment of post-renovation finish level, and awareness of local market conditions that quantitative data alone may not capture.