After Repair Value (ARV) Calculator Formula

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

Use the After Repair Value (ARV) Calculator

Formulas Used

Estimated After-Repair Value

estimated_arv = adjusted_arv

Base Comp Value (Before Adjustment)

base_value = base_arv

Total Investment (Purchase + Rehab)

total_project_cost = total_investment

Potential Equity Created

potential_equity = adjusted_arv - total_investment

Investment-to-ARV Ratio

investment_to_arv = adjusted_arv > 0 ? (total_investment / adjusted_arv) * 100 : 0

Variables

VariableDescriptionDefault
avg_comp_price_per_sqftAverage Comp Price Per Sq Ft(USD)175
property_sqftProperty Square Footage(sq ft)1800
condition_adjustment_pctCondition Adjustment(%)5
purchase_pricePurchase Price(USD)200000
rehab_costTotal Rehab Cost(USD)45000
base_arvDerived value= avg_comp_price_per_sqft * property_sqftcalculated
adjusted_arvDerived value= base_arv * (1 + condition_adjustment_pct / 100)calculated
total_investmentDerived value= purchase_price + rehab_costcalculated

How It Works

Understanding After-Repair Value

ARV is the estimated market value of a property after all planned renovations and repairs are completed. It is a cornerstone metric for house flippers and BRRRR investors.

Formula

ARV = Average Comparable Price Per Sq Ft x Property Sq Ft x (1 + Condition Adjustment)

How to Find Comparables

  • Look at recently sold properties within 0.5 miles
  • Match bed/bath count, square footage within 20%, similar age
  • Use only sales from the last 3-6 months
  • Adjust for differences in condition, lot size, and features

    • The 70% Rule

    Many investors follow the 70% rule: Maximum Purchase Price = ARV x 70% - Rehab Cost. This leaves a margin for profit and unexpected costs.

    Worked Example

    A 1,800 sq ft property with comps averaging $175/sq ft, a 5% positive condition adjustment, $200,000 purchase, and $45,000 rehab budget.

    avg_comp_price_per_sqft = 175property_sqft = 1800condition_adjustment_pct = 5purchase_price = 200000rehab_cost = 45000
    1. 01Base comp value: $175 x 1,800 = $315,000
    2. 02Condition adjustment: $315,000 x 1.05 = $330,750
    3. 03Estimated ARV: $330,750
    4. 04Total investment: $200,000 + $45,000 = $245,000
    5. 05Potential equity: $330,750 - $245,000 = $85,750
    6. 06Investment-to-ARV ratio: $245,000 / $330,750 = 74.1%

    Frequently Asked Questions

    How accurate is the ARV estimate?

    ARV accuracy depends entirely on the quality of your comparable sales data. Using recent sales of truly similar properties in the immediate area gives the best results. Most experienced investors budget a 5-10% margin of error.

    What is the 70% rule in house flipping?

    The 70% rule states that you should pay no more than 70% of the ARV minus repair costs. So if ARV is $300,000 and repairs are $40,000, the maximum offer would be $300,000 x 0.70 - $40,000 = $170,000.

    Does ARV account for selling costs?

    No. ARV is the estimated market value only. You still need to subtract selling costs (agent commissions, closing costs, holding costs) from your profit calculation. These typically total 8-12% of the sale price.

    Ready to run the numbers?

    Open After Repair Value (ARV) Calculator