Lesson 2: ARV Explained - Estimate Property After Repair Value

What is ARV?

ARV (After Repair Value) is the estimated market value of a property AFTER all repairs and renovations are completed. It's what the property COULD sell for in retail condition.

Why ARV is the Most Important Number

Every deal calculation starts with ARV. It determines:

Your maximum offer - ARV caps what you can pay

Buyer interest - Flippers need to know the end value

Profit potential - Higher ARV = more room for profit

Real Example: San Antonio Property

Current Condition:

• 3 bed, 2 bath, 1,800 sqft
• Outdated kitchen (1990s cabinets)
• Worn carpet throughout
• Old HVAC system
• Current "as-is" value: $180,000

After Renovation ($40K rehab):

• Modern kitchen with granite counters
• New LVP flooring throughout
• Updated HVAC
• Fresh paint, new fixtures
• ARV: $280,000

How to Calculate ARV

ARV is determined by looking at comparable sales (comps) - recently sold properties similar to what your subject property WILL BE after repairs.

The 3-Step Process:

Find 3-5 comparable SOLD properties

Same neighborhood, similar size, recently renovated/updated condition

Calculate price per square foot

Sale Price ÷ Square Footage = $/sqft

Apply to your subject property

Average $/sqft × Subject Sqft = ARV

Common ARV Mistakes

Using active listings - Only use SOLD properties. Listings are wishes, not reality.
Comparing apples to oranges - Don't comp a 3BR against a 5BR or use distressed sales.
Ignoring condition - Comps must match the AFTER condition, not current condition.
Old data - Use comps from last 90 days maximum. Markets change fast.

Key Takeaway

ARV is what the property will be worth when finished - not what it's worth now. Get this number right, and every other calculation falls into place. Get it wrong, and the whole deal fails.