ARV Calculator (After Repair Value)
Print| Projected ARV Value | $0.00 |
| Estimated Gross Flip Profit | $0.00 |
In real estate investing and house flipping, After Repair Value (ARV) represents the estimated market value of a property after all planned renovations, upgrades, and repairs are completed. Evaluating ARV accurately is the single most critical factor in determining whether a real estate flip or BRRRR (Buy, Rehab, Rent, Refinance, Repeat) investment will yield a healthy profit. Our free ARV Calculator – After Repair Value computes your project’s estimated ARV, applies the industry-standard 70% Rule, and calculates your Maximum Allowable Offer (MAO).
Whether you are a seasoned real estate investor, a wholesaler analyzing deals, or a first-time house flippers, read on to explore valuation formulas, 70% rule benchmarks, and step-by-step calculation guides.
How After Repair Value (ARV) Is Calculated
Determining ARV and evaluating real estate deal profitability involves three fundamental formulas:
1. After Repair Value (ARV) Formula:
ARV is calculated by analyzing recent comparable sales (“comps”) of renovated homes in the immediate neighborhood:
ARV = Property Square Footage × Average Price per Sq Ft of Renovated Comps
2. The 70% Rule Formula (Maximum Allowable Offer):
The 70% rule dictates that an investor should pay no more than 70% of the ARV minus estimated repair costs:
Maximum Allowable Offer (MAO) = (ARV × 0.70) - Estimated Repair Costs
3. Net Investor Flip Profit Formula:
To estimate net profit after accounting for purchase price, rehab, holding costs, and closing fees:
Total Investment Costs = Purchase Price + Repair Costs + Holding/Financing Costs + Closing Costs
Estimated Net Profit = ARV - Total Investment Costs
ARV & Maximum Allowable Offer (MAO) Reference Table
The table below presents Maximum Allowable Offers (MAO) across various ARV property values and renovation cost tiers using the investor 70% rule [MAO = (ARV × 0.70) – Rehab Costs]:
| After Repair Value (ARV) | 70% Base Limit (ARV × 0.70) | Light Rehab ($25,000) | Medium Rehab ($50,000) | Heavy Rehab ($85,000) |
|---|---|---|---|---|
| $250,000 | $175,000 | $150,000 MAO | $125,000 MAO | $90,000 MAO |
| $350,000 | $245,000 | $220,000 MAO | $195,000 MAO | $160,000 MAO |
| $500,000 | $350,000 | $325,000 MAO | $300,000 MAO | $265,000 MAO |
| $650,000 | $455,000 | $430,000 MAO | $405,000 MAO | $370,000 MAO |
Step-by-Step Calculation Example
An investor analyzes a distressed single-family home. Based on 3 nearby renovated comps, the estimated ARV is $400,000. Estimated renovation costs total $55,000.
Step 1: Calculate 70% of the After Repair Value
70% ARV Base = $400,000 × 0.70 = $280,000.00
Step 2: Subtract estimated repair costs to determine Maximum Allowable Offer (MAO)
MAO = $280,000 - $55,000 = $225,000.00
Step 3: Estimate net flip profit if purchased at $225,000 with $20,000 holding/closing fees
Total Cost = $225,000 (Purchase) + $55,000 (Rehab) + $20,000 (Fees) = $300,000.00
Estimated Net Profit = $400,000 (ARV) - $300,000 = $100,000.00
Result Summary:
The investor should offer no more than $225,000.00 for the distressed property to maintain a 30% risk cushion and generate up to $100,000.00 in gross flip profit.
Frequently Asked Questions (FAQ)
What is a good comparable sale (“comp”) when estimating ARV?
A good comp is a home within 0.5 to 1 mile of the subject property, sold within the last 3–6 months, possessing similar square footage (+/- 15%), matching bed/bath counts, and exhibiting fully renovated condition.
What is the 70% rule in house flipping?
The 70% rule is a real estate rule of thumb stating that an investor should pay no more than 70% of a property’s After Repair Value (ARV) minus estimated repair costs, ensuring a 30% margin for holding costs, closing fees, and profit.
How do hard money lenders use ARV?
Hard money lenders typically fund hard money flip loans based on a percentage of ARV (often up to 70% or 75% of ARV), rather than the current purchase price, covering both acquisition and rehab costs.
What happens if renovation costs exceed estimates?
Cost overruns directly erode investor profit margins. Applying the 70% rule provides a protective financial buffer to absorb unexpected repair expenses without turning the flip into a net loss.