Arv Calculator (After Repair Value & Maximum Allowable Offer)

What Is After Repair Value (ARV)?

After Repair Value (ARV) is the projected market value of a real estate property once all planned renovations reach completion. Fix-and-flip investors, BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategists, and hard money lenders depend on an accurate ARV to assess deal viability before committing capital. According to Investopedia, ARV is most reliably derived from the Sales Comparison Approach—sourcing recent sold data on fully renovated comparable properties in the immediate area.

The ARV Formula

ARV is calculated by multiplying the average sold price per square foot of comparable renovated homes by the subject property's above-grade livable square footage:

ARV = Average Comp Price per Sq Ft × Subject Property Sq Ft

Example: Three recently renovated homes in the target neighborhood sold for $185, $190, and $195 per square foot—averaging $190 per sq ft. The subject property measures 1,300 sq ft. ARV = $190 × 1,300 = $247,000.

The Maximum Allowable Offer (MAO) Formula

ARV alone does not determine what to pay for a property. The Maximum Allowable Offer (MAO) applies the investor's target percentage rule and subtracts estimated repair costs to establish the highest safe purchase price:

MAO = (Avg. Comp Price per Sq Ft × Subject Sq Ft × Investor Rule %) − Repair Costs

This formula integrates four distinct variables, each requiring careful sourcing.

Variable Breakdown

• Average Comparable Sales Price per Sq Ft: Pull from MLS-verified sales within 0.5 miles, closed within the last 6 months, with similar bed and bath counts and above-grade square footage within 20% of the subject. Use only renovated comparables—mixing distressed or as-is sales into the pool understates ARV and distorts the MAO ceiling.
• Subject Property Square Footage: Measure above-grade livable area only. Unfinished basements, detached garages, and storage areas are excluded unless local appraisal conventions differ.
• Investor Rule (% of ARV): The industry-standard 70% Rule is the default benchmark for fix-and-flip projects. The 30% buffer covers acquisition costs, financing charges, holding costs (taxes, insurance, loan interest—typically 1–2% per month), selling commissions (5–6%), and target profit margin (10–20% of ARV). BRRRR investors in stable markets may stretch to 75–80%; structurally compromised or high-uncertainty deals warrant 60–65%.
• Estimated Repair and Rehab Costs: Include all labor, materials, permits, and inspections plus a 10–15% contingency buffer. Typical line items: roof replacement ($8,000–$15,000), HVAC system ($5,000–$12,000), full kitchen remodel ($15,000–$40,000), bathroom renovation ($5,000–$15,000 each), flooring ($3–$8 per sq ft), interior and exterior paint ($1.50–$3.50 per sq ft), and landscaping ($2,000–$8,000).

The 70% Rule in Practice

The 70% Rule, extensively documented by BiggerPockets, acts as a built-in safety margin that absorbs renovation cost overruns, market softening, and timeline delays. Paying 70 cents of every post-repair dollar preserves 30 cents to cover all transaction friction and generate a return.

Worked Example

A distressed 3-bedroom home requires $42,000 in repairs. Nearby renovated comparables average $210 per square foot. The subject property has 1,250 sq ft of above-grade living area.

• ARV = $210 × 1,250 = $262,500
• MAO at 70% = ($262,500 × 0.70) − $42,000 = $183,750 − $42,000 = $141,750
• MAO at 75% = ($262,500 × 0.75) − $42,000 = $196,875 − $42,000 = $154,875

Any offer above $141,750 under the 70% rule compresses the profit cushion—a $10,000 cost overrun in a deal purchased at $154,875 can eliminate the entire margin.

When to Adjust the Percentage Rule

Market conditions and deal specifics dictate which percentage to apply. In fast-moving, low-inventory markets with average days-on-market under 30, experienced investors sometimes stretch to 75%. Properties with structural damage, foundation concerns, environmental hazards, or location in a declining market warrant a stricter 60–65% ceiling. Always stress-test the MAO against best-case, base-case, and worst-case repair and resale scenarios before finalizing an offer.

Sources and Methodology

The ARV calculation methodology used in this tool aligns with the Sales Comparison Approach described by Rocket Mortgage and the 70% Rule framework documented by Fortune Builders. For deal-level accuracy, verify comparable sales data with a licensed real estate agent or certified appraiser before finalizing any purchase offer.