Underwriting

ARV (After Repair Value)

The price a property will sell for once all renovations are complete, established from recent comparable sales.

Definition

ARV stands for After Repair Value — the fair market value of a property assuming it has been fully renovated to retail condition. It's calculated using comparable sales (comps) of similar, recently sold, fully renovated properties within a tight radius of the subject property. ARV is the ceiling for every other calculation on a flip or BRRRR deal. Get ARV wrong and every downstream number collapses.

Example

Subject property is a 3BR rowhome in Dundalk. Three sold comps within 0.4 miles, renovated to retail, sold in the last 4 months, range from $235K-$250K. ARV = $240K (mid-range).

Related terms

MAO (Maximum Allowable Offer)

The highest price an investor can pay for a property and still hit their target profit.

70% Rule

A quick underwriting shortcut: pay no more than 70% of ARV minus rehab cost.

Comparable Sales (Comps)

Recently sold properties similar to the subject, used to estimate value.

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