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What is ARV in real estate? After-repair value explained
ARV stands for after-repair value. It is what a house should sell for once the renovation is finished, and it sets the most a fix and flip lender will lend.
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Estimate only. Loan amount is the lower of 100% of purchase plus rehab or 70% of the sale price when finished (after-repair value). Minimum loan $150,000. Business-purpose loans on investment property.
ARV in one sentence
After-repair value is the expected sale price of a house after the planned repairs are done. It is an estimate of the future, based on what similar renovated houses have already sold for.
How to estimate ARV
- Find recent sales of renovated houses close to yours.
- Keep the ones that match on size, bedrooms, bathrooms and age.
- Work out the price per square foot of those sales.
- Apply that price per square foot to your house.
Be conservative. If your estimate is too high, the loan limit and your profit are both overstated.
Why lenders care about ARV
The finished house is what repays the loan, so lenders cap the loan at a share of ARV. Our limit is 70%.
| Deal | Amount |
|---|---|
| Purchase price | $180,000 |
| Rehab budget | $60,000 |
| Total cost | $240,000 |
| After-repair value | $360,000 |
| 70% of after-repair value | $252,000 |
| Loan amount | $240,000 |
ARV and the 70% rule
Investors use ARV to set their offer. The 70% rule says: pay no more than 70% of ARV minus the rehab budget. Buy at or under that price and we fund 100% of the purchase and the rehab. Try it in the ARV calculator.
Questions investors ask
Straight answers about what is ARV in real estate.
What does ARV stand for?
After-repair value: what a house should sell for once the renovation is finished.
How is ARV calculated?
By comparing recent sales of similar renovated houses nearby and applying their price per square foot to your house.
What share of ARV will you lend?
Up to 70% of the after-repair value.
What does 100% fix and flip financing mean?
We fund 100% of the purchase price and 100% of the rehab budget, as long as the total loan is no more than 70% of the after-repair value.
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