What is After Repair Value?

What is the After Repair Value (ARV) Formula in Real Estate?

By Liz Brumer-Smith – Updated Oct 8, 2025 at 2:21 AM

Key Points

ARV is the property's value after renovations, calculated using recent sales of similar nearby properties.
To determine ARV, average the sales price of comparable properties, adjusting for size and condition.
ARV formula helps set maximum offer price: 70% of ARV minus repair costs to ensure profit.

If you want to start real estate investing -- especially flipping houses -- after repair value (ARV) is one of the most important terms to know. So what is it exactly? We’ll dive in and explain everything you need to know about after repair value, including how to calculate it, when to use it, and things to keep in mind when using ARV as a real estate investor.

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Miniature houses on top of stacks of coins. — Source: Getty Images

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An infographic showing and explaining the formula used to calculate after repair value. — Image source: The Motley Fool

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Per Square Foot (PSF)

A measurement that represents the area of a square with each side equal to one unit, commonly used to price materials or space.

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To get a more precise ARV, you can determine the average per square foot price (total sales price divided by the total square feet of the property), then multiply that price by the number of square feet in the subject property. For example, you found four comparable properties with an average price per square foot of $145. The subject property is 1,200 square feet, so your ARV would be $174,000.

Calculating the ARV of an investment property requires some skill and practice. Some investors are able to determine the ARV on their own, while many seek the help of a professional real estate agent to get a comparative market analysis (CMA).

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An infographic showing and explaining the 70% rule for after repair value calculations. — Image source: The Motley Fool

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Having an accurate idea of estimated repair costs is essential to the success of using the ARV formula. Investors should account for every expense relating to the renovation of the property, including but not limited to:

Cosmetic improvements (such as new kitchen cabinets, countertops, appliances, paint, landscaping, light fixtures, backsplash, etc)
Structural improvements (such as a new HVAC, roof, plumbing, electrical, repairs to structural damage, etc)
Holding costs utilities (such as water, electricity, and property insurance)

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About the Author

Liz Brumer-Smith is a real estate investor and Motley Fool contributor specializing in commercial and residential real estate, real estate mortgage notes, non-performing notes, and REITs. Prior to joining the Fool, Liz taught in an elementary classroom in Orlando, FL for just over 6 years. Liz travels and lives full-time in her RV with her husband and two cats. When she isn't writing, you can find Liz eating delicious food, hiking, relaxing on the beach, or exploring new places in Mexico, Canada, or North America while recording and sharing the adventures on Youtube on her channel.

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