After Repair Value (ARV), explained for agents and investors
Every flip, every rental rehab, every "should I renovate before I sell" decision runs on one number: what the property will be worth after the work is done. That number has a name — After Repair Value, or ARV — and getting it right is the difference between a deal and a money pit.
ARV gets talked about as an investor-only term, but any agent advising a seller or a buyer on a fixer is using it whether they call it that or not. Here's how it works, and the one input that quietly decides whether the whole calculation holds up.
What ARV actually means
After Repair Value is the market value of a property once the planned renovation is complete — not what it's worth today in its dated, tired state, but what it will appraise and sell for finished. You establish it the same way you price any home: comparables. You find recently sold homes nearby that match what this property will be once renovated, and let those set the number.
The trap is anchoring to the wrong comps. ARV isn't the average of the street; it's the value of the finished version of this house against other finished houses. Pull comps that match the after, not the before.
The rule of thumb investors use
There's a well-worn heuristic in the investing world — often called the 70 percent rule — that ties it together: an investor will pay up to about 70 percent of the ARV, minus the repair costs, to leave room for profit and the costs of doing business. On a property with a $400,000 ARV and $50,000 of repairs, that's roughly $400,000 × 0.70 − $50,000 = $230,000 as a target purchase price.
You don't have to treat 70 percent as gospel — seasoned investors flex it by market and risk. The point is the shape of the math: ARV anchors the top, repair costs come off it, and what's left is what the deal can bear. Change any input and the offer moves.
ARV is only as good as your repair estimate
Here's where most ARV math goes wrong, and it isn't the comps — it's the repair number. People research comparables carefully and then plug in a repair figure they basically guessed. But that guess sits right in the middle of the formula. Underestimate the work by $30,000 and a deal that looked great is suddenly underwater, no matter how good the ARV looked.
It's the same lesson as pricing any renovation: the visible finishes are easy to ballpark; the structural, mechanical, and behind-the-walls work is where estimates blow up. A credible ARV calculation needs a credible repair estimate sitting next to it, not a number off the top of someone's head.
Where agents and investors get the real number
This is exactly why it helps to put real estimating behind the repair figure instead of guessing. Building a quick takeoff — or having a contractor scope it — turns the riskiest input in the ARV formula into something defensible. In the Takeoff Builder you can turn a walkthrough into a priced estimate you can actually stand behind.
And since the same property often travels from analysis to renovation to listing, keeping the deal, the property record, and the estimate in one workspace means the numbers you ran at the start are still there at the finish. See Stairkey for real estate.