ARV (After-Repair Value)

After-repair value (ARV) is a real estate valuation concept used to estimate the market value of a property after planned renovations, repairs, or improvements have been completed. It is commonly applied in investment contexts, particularly with properties that are purchased in distressed or outdated condition and then improved for resale or rental. ARV is typically calculated by analyzing comparable properties, often called “comps,” that have recently sold in the same market area with similar size, condition, and features as the subject property is expected to have after renovation. The estimate assumes that all proposed improvements are completed to a standard consistent with those comparable properties and that market conditions remain relatively stable.
ARV is a critical metric in investment decision-making because it helps determine the potential profitability of a project. Investors often use ARV to set acquisition and renovation budgets, evaluate financing options, and estimate resale price. One commonly referenced guideline is the “70 percent rule,” which suggests that an investor should pay no more than 70 percent of the ARV minus the estimated cost of repairs, although this rule varies by market and risk tolerance. While ARV can be a useful planning tool, it is inherently speculative, as it depends on accurate repair estimates, reliable comparable sales data, and future market performance.