What does ARV mean?
ARV means After-Repair Value: an estimate of what the property may be worth after the planned renovation is complete.
Why ARV matters
- It helps investors estimate potential resale value.
- Hard-money lenders may use ARV as one part of determining maximum loan size.
- It affects how much room exists for purchase price, rehab, financing, holding costs, selling costs, and profit.
What makes a better comparable sale?
Similar location
Nearby properties are generally more useful than properties in a different neighborhood or school area.
Similar property
Size, age, bed/bath count, lot, garage, style, and condition should be reasonably comparable.
Recent sale
Older sales can become less useful when prices or market conditions have changed.
Similar renovation level
A basic rehab should not automatically be valued like a fully redesigned premium renovation.
A common ARV mistake
Investors sometimes begin with the value they need the property to be worth and then search for comps that support it. A better process is to study the strongest comparable evidence first and let the evidence guide the range.
Stress-test the number
Instead of analyzing only one perfect resale price, consider what happens if the sale price is lower or the marketing period is longer. If a modest change wipes out the expected profit, the deal may have very little cushion.
ARV and hard money
Hard-money lenders can consider ARV, but they also look at the purchase, project cost, borrower, property, and exit. A high ARV estimate alone does not guarantee a particular loan amount.
Put ARV in context
Next, test your understanding of ARV, rehab, holding costs, and the exit.
Take the Fix & Flip Quiz