What is ARV or “After Repair Value”?

by | BiggerPockets.com

Will BarnardWill Barnard is a real estate rehabber out of Southern California.

In our interview with Will (5:48 minutes), we learn what ARV or After Repair Value is, and how a house flipper would go about calculating this value. We also learn about finding comps and why ARV is so important.

You can also learn more about Will’s company at Barnard Enterprises

Be sure to read and watch dozens of other real estate interviews from BiggerPockets today!

About Author

Joshua Dorkin

Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of How to Invest in Real Estate. He started BiggerPockets to help democratize the real estate investing landscape for himself and others, aiming to make it accessible for everyone, regardless of income or education. Today, BiggerPockets is the premier real estate investing website online with over one million members and reaching over 70 million people with the message of financial freedom through real estate investing. Joshua, along with his wife and three daughters, make their home in Denver, Colorado, and spend any time they can traveling, exploring, and adventuring. Read more about Joshua’s story in 5280 and Inc.com.


  1. I really enjoyed our time doing the short series of interviews Josh and look forward to the posting of the next one.

    If anyone has any specific questions regarding the topic of this interview, please do not hesitate to post your question here.

    Will Barnard

  2. Nakeya Womack on

    Josh, Will, thank you so much for the post. I myself am just getting into Real Estate Investing as a Wholesaler. I do not want to the mistake of giving a false exit value for my Investors, willing nor unwilling. My question to you Will is…is knowing the ARV enough to really know my market? If not, what info would I need to know to really know my market? Thanks so much!!!

    • Great question Nakeya!
      Knowing your market has to do with knowing how to run comps and make adjustments for comps that do not exactly match the subject property. For instance, if one comp has 100 square fet more than the other, you need to know how to make the adjustment properly and accurately. Same goes for ammenities such as pools, views, better streets/areas, etc. as well as bed/bath counts. A 3 bed 2 bath home (3+2) is not a comp for a 5+3, but it can be for a 4+2, you just need to know how much to add for that extra bedroom.

      Also, you should know your inventory levels. Many invetsors fail to recognize or know to look for this. It is a way to provide a good look into the short future and what your market is doing. For instance, if your farm area has 1000 current active listings and 4 months ago, that number was 700, you know know that inventory levels are rising (supply) which likely will result in price drops and vice versa. You also want to track sub-categories of inventory levels. For example, if 1000 qty is your current inventory, you should know how mny are short sales, how many are REO’s, and how many are standard sales.

      Lastly, you want to track DOM (days on market) Knowing how long your market is taking to liquidate standard sales gives you an idea of your hold time on yoru exit.
      Hope that helps!

      • hi.., I’m late to the party here, but hopefully I can still get an answer from @Will Barnard..

        you mentioned getting to know subcategories like ss, reo, std sales for ur target category that you plan to flip. just curious… how can this be helpful data when determining ARV or for your plans on flipping? distressed (ss, reo, prb) don’t comp out as the same for a retail (std, rehabbed std) prop, right?

  3. Oh my goodness!! Thank you so much Will!! That was wonderful. I would have never thought to look at supply and demand, but it makes since though. This is wonderful advice and I will apply it accordingly to my business transactions. Thanks again…. awsome stuff!!!!

  4. Kelvin, knowing subcategories of inventory does not necessarily help you determine an ARV, at least not on its own, but helps you make a necessary adjustment to ARV. What that means is let’s say 80% of your market inventory is REO and Short Sales. That leaves only 20% for standard sales and probates. If buyer demand is high, that means your “competition” on exit is low, thus you can likely obtain top of market pricing. Buyer demand is the major element in that calculation. What these subcategories mostly help determine is Days on Market (DOM). When you have a large majority of solds being distressed sales, particularly short sales, the DOM average climbs considerably which on the surface, could provide a false reading of DOM. Thus, by eliminating these from the solds and ONLY using standard sales, you can get a better feel for the average DOM in that area.

    Also, by separating the categories, you can get a better feel of your exit competition.
    Hope that answered your questions, if you ave more, please do ask.

  5. I am wondering if the 70% rule is really working out for people? I have flipped homes since 1998 but haven’t used this rule. I have a home I just closed on yesterday. ARV is $340,000. I picked up the home for $220,000. It is a smaller rehab job – about $40,000 – and I expect to make around $60k on the deal. According to the 70% calculator I would need to have picked up this home for $138,000 – which would profit me over 140k (which would be nice, I admit…)

    I am thinking the 70% rule applies more to smaller purchase prices? In the Portland market most of the homes we buy to flip are 150,000 plus.

    I appreciate the input – just wondering about that…

    • My calculations show the 70% rule in your scenario would have meant pay no more than $198000. 70% of $340000 is $238000 – $40000 for repairs gives a max purchase price of $198000. But this is a rule of thumb for quick analysis. Factors that play a major part of that calculation are cost of money and profit margin. What are you expecting to NET from that $80000 difference?

    • erik larson

      Oddly I’m dragging this up years later but Stuart is totally right on the 70% calc’s calcs being odd. I run his numbers and get the $138k, but if run through the Flip calc with $60 est net and reasonable closing and agent costs $220k is the MAO for that flip. How does this get $80k off the mark?

      • Duane Bradley

        Hi Everyone,
        I am new to this site today. I just saw this calculator discussion now. Will, maybe if you can explain what the term “Additional Profit” means and when it should be used would be helpful. I believe it is being misunderstood as to mean that is the profit one wants to end up with. However, isn’t the basic profit already in part of the 30% (100%-70%) in the calculation? Also, as a suggestion, it might be clearer if the Calculator would show an Estimated Potential Profit $ amount as a result of the calculation. None of the discussions clearly state what the 30% is to cover. That might help to clarify the discussion. Thanks to everyone for providing your questions and comments. It helps me also.

    • Will Barnard

      Your numbers are off. 70% of the $340k ARV is $238,000 (not $138k) and then you still have to minus the rehab number of $40k, making the max offer amount $198,000 (not the $138k you stated).
      So does the 70% rule apply only to small properties? No, but keep in mind it does need adjustments according to pricevpoints, market conditions, investor abilities and experience, etc. In my local So Cal market and many others across the nation where exit prices are $250k on up, it is a tiny needle in a haystack to find a deal at 70% because competition is so fierce and many locations have seller’s markets.

  6. Samori Diallo on

    Josh, Will, thank you for this post. I am currently in my education phase, soon becoming a wholesaler. Can you please clarify the following for me:
    1. You didn’t mention thoroughly inspecting the physical condition of the home as a component of your arv calculation. How accurate can an arv analysis be without going out and seeing the home yourself or sending a trusted inspector?
    2. How does one go about finding out what the inventory levels and sub-categories are in a target market? Do we get this information from Real estate agents, checking the mls, or by some other means.
    3. Lastly, how does one learn to make the adjustments when doing comps for homes that are not exactly the same makeup? Is it something you learn over time from doing it, or is there training on that anywhere? I believe that is a crucial skill to master. Thanks! I look forward to your reply.

    • Frank Fletcher Broucek

      The physical condition is reviewed by the home inspector. A report is prepared after a half day on site inspection. Repair, rehabilitation and remodeling estimates are considered, then the buyer decides to walk away, go ahead or renegotiate. Two thirds of my clients renegotiate. A buyer has to beware of the construction skills of the flipper contractors.

      Frank Fletcher Broucek
      Home Inspector

    • Will Barnard

      Samori, please donpost this question in the forums as Josh suggested and @mention me so I can respond as they are great questions.
      1. The home inspection is not a component of the ARV,rather, the rehab costs. The ARV is derived by finding sold comps with finishes and amenities in the immediate neighborhood that would match what your subjectbpriperty WILL be after you renovate it.
      2. Good real estate agents should have this info, you can also get it from title companies, however, the information would need to be gathered every quarter (or monthly) so you can develop a history of it. The history allows you to forecast where your market is going.
      3. Practice, practice, practice. Estimating the ARV is a combination of not just the math and science but also an art form. It takes practice and experience. Hope that. Helps.

  7. Tom Chen

    Hi Will / Hi Josh,

    When you put a new roof on, can you recoup that cost at the refi?

    In other words, the duplex I bought was $45k.

    A new roof, 2nd floor floors and kitchen ran me approximately $16k.

    When I go to refi, will the duplex now be valued at $60k+?

    Other duplexes that have been rehabbed seem to also run around the 60s – 70s.

    • Will Barnard

      The value is not based on how much you spent in repairs (although such evidence can’t be used to argue your valuation) but how much the appraiser appraised the property for by comparing the sold comps (which is how 1-4 unit properties are valued typically).

  8. Will Boedeker

    I’m a new BP member and appreciate this perspective on ARVs. This interview was held a few years ago and Will mentioned avoiding zestimates and relying on sold comps for a better accuracy, which makes sense to me. Do you think Zillow has made any progress with their zestimates or exit values?

  9. Wayne Warren

    I have just joined BP and have scoured the site for a calculator that would help/guide me with soft costs. The calculators I have seen on the BP site use the term “Rehab costs,” which to me is “hard costs.” But you also have to consider “soft costs” (Broker Fees, Transfer Tax, Title Insurance, Builder’s Risk Insurance, electricity used during construction, Gas (repeat), Water (repeat), Title Clearance, Taxes, Liens, Miscellaneous). Why is this not a separate item in your calculators? I am working on a prop now where the hard costs = $46,000 but the soft costs = a little over $22,000. Not an insignificant amount and one which should be in the calculator if it isn’t already. You may tell me to include it in the Rehab Costs but the calculator’s text does not say that.

    Also, I am having a terrible time with the Rental calculator. I need more education. I need to be fed with a fire hose because I’m working deals at the same time I am getting educated and am terrified of making a costly mistake. Perhaps I should stop, educate myself , and then hit the starter button again. I was a Commercial Broker years ago and I am not sure how well that translates to the Residential market.

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