ARV is the number every renovation deal is built on. Purchase price, rehab budget, loan size and profit all get measured against it, which means an ARV that is 10% optimistic does not make a deal 10% worse — it can erase the margin entirely. It is an estimate of a future price in a market that has not happened yet, and it deserves more scepticism than it usually gets.
How ARV is estimated
By comparable sales of renovated properties, not of properties in the subject’s current condition. Pull closed sales from the last three to six months, within roughly half a mile, matched on bedrooms, bathrooms, square footage, age and style, and finished to the standard you intend to deliver. Adjust for differences. The rigour is in the comparables — an ARV built on three loosely similar sales from a year ago is a guess wearing a number.
How lenders use it
Hard money and fix-and-flip lenders typically size loans against ARV rather than purchase price — commonly 65–75% of ARV, sometimes with a separate constraint on purchase-price LTV and a rehab holdback released in draws. The lender orders its own ARV appraisal, and that figure, not yours, governs the loan. A gap between your ARV and the appraiser’s is the most common reason renovation deals get repriced days before closing.
The 70% rule, and what it leaves out
The familiar screen is maximum offer = (ARV × 0.70) − rehab cost. On a $400,000 ARV with $60,000 of rehab, that is $220,000. The 30% haircut is meant to absorb financing costs, holding costs, selling costs and profit. It is a screen, not an analysis — it assumes a typical hold period and a typical cost structure, and in markets with high transfer taxes or long selling times it is not conservative enough. See the 70% rule for the full arithmetic.
Where ARV estimates go wrong
Four recurring failures. Using active listings instead of closed sales — asking prices are aspirations. Assuming appreciation between now and completion, which turns an estimate into a forecast. Over-improving beyond what the comparables support, where the last $30,000 of finishes returns nothing. And treating one unusually high sale as the comp rather than the outlier it probably is. Build the ARV from closed sales, in today’s money, at the neighbourhood’s actual ceiling.
ARV and the refinance exit
On a BRRRR, ARV determines whether you get your capital back: the refinance is sized against appraised value, and if the appraisal lands below your ARV the difference stays trapped in the deal. Most DSCR lenders will lend on appraised value after a seasoning period rather than on your purchase price plus receipts — see seasoning for how long that takes. Stress-test the deal at 90% of your ARV before committing; if it still works, the estimate has room to be wrong.
After Repair Value (ARV) FAQ
The lender’s appraiser. Your estimate guides your offer; the appraisal governs the loan amount.
Closed sales. Active listings show what sellers hope for, which in a slowing market is systematically above what buyers pay.
Three to six months is standard. Older comps need adjustment for market movement, and in a fast-moving market they can mislead badly in either direction.
No. ARV is the finished value. Rehab cost is subtracted separately when calculating a maximum offer.
The loan shrinks, and you cover the gap with cash, renegotiate, or walk. This is why deals should be underwritten with an ARV cushion rather than at your best case.
Yes — most DSCR lenders will lend against appraised value rather than your cost basis once the property has been held long enough to satisfy seasoning. Requirements vary, so confirm before you buy.