After Repair Value Calculator Formula

Understand the math behind the after repair value calculator. Each variable explained with a worked example.

Use the After Repair Value Calculator

Formulas Used

After Repair Value (ARV)

arv = current_value + value_added

Total Value Added

total_value_added = value_added

Net Equity Gain

equity_gain = value_added - rehab_cost

Variables

VariableDescriptionDefault
current_valueCurrent Property Value(USD)200000
rehab_costTotal Rehab Cost(USD)50000
value_add_multiplierValue-Add Multiplier1.5
value_addedDerived value= rehab_cost * value_add_multipliercalculated

How It Works

Estimating After Repair Value

ARV projects what a property will be worth once renovations are complete, using a value-add multiplier that reflects how much each rehab dollar increases property value.

Formula

ARV = Current Value + (Rehab Cost x Value-Add Multiplier)

Value-Add Multiplier Guidelines

  • 1.0 means each dollar spent adds exactly one dollar of value (break-even)
  • 1.5 means each dollar spent adds $1.50 of value (typical for smart renovations)
  • Below 1.0 means you are over-improving relative to the neighborhood

    • Worked Example

    A distressed property is worth $200,000 as-is. You plan $50,000 in renovations with a 1.5x value-add multiplier.

    current_value = 200000rehab_cost = 50000value_add_multiplier = 1.5
    1. 01Value added by renovations: $50,000 x 1.5 = $75,000
    2. 02After Repair Value: $200,000 + $75,000 = $275,000
    3. 03Net equity gain from renovation: $75,000 - $50,000 = $25,000

    Frequently Asked Questions

    What is a good value-add multiplier?

    A multiplier of 1.3 to 1.7 is common for well-planned renovations. Kitchen and bathroom remodels typically offer the highest return. Over-improving for the neighborhood can push the multiplier below 1.0.

    How do investors use ARV?

    Flippers use ARV to determine their maximum purchase price (often 70% of ARV minus rehab costs). Rental investors use it to estimate post-renovation equity for refinancing.

    Should I use ARV or appraised value?

    ARV is a forward-looking estimate used in deal analysis. The appraised value is the official figure a lender uses after renovations are complete. They should be close if your ARV estimate was accurate.

    Ready to run the numbers?

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