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"Everything in flipping flows from ARV. Get it right and there's a deal. Get it wrong and you might not know until you're sitting at closing losing money you thought you were making."
After Repair Value (ARV) is the estimated market value of a property after all renovations are complete. It's the number that determines what you can afford to pay for the house, how much you can borrow from a hard money lender, and what profit you'll actually make when you sell.
New flippers make one of two errors: they pull ARV from Zillow's Zestimate (unreliable for individual properties) or they get excited about a property and let optimism inflate the number. Experienced flippers treat ARV as a scientific calculation — and then apply a margin of safety on top of it.
Why ARV Is the Foundation of Every Flip
Every key number in a flip derives from ARV:
If you pay $151,000 or less, the deal works. If you pay $165,000 because you estimated ARV wrong, the deal doesn't.
How to Pull Comparable Sales (The Right Way)
ARV comes from analyzing recent comparable sales — properties similar to yours that sold after being renovated. Here's the criteria:
Sales within the last 90 days. Markets move. A comp from 18 months ago in a shifting market is dangerous.
Within 0.5 miles ideally — 1 mile maximum. Crossing a major road, school district boundary, or neighborhood line can change values dramatically.
Within 200–250 sq ft of your target property. Adjust by a per-sq-ft rate for anything outside that range.
Fully renovated, retail-ready sales only. You're calculating what a renovated property sells for — not what distressed properties sell for.
Same property type (ranch to ranch, two-story to two-story). Beds and baths should be comparable — adjust for differences.
🔍 Where to find comps
MLS access (via your agent) is the gold standard. Zillow "Recently Sold" works for a quick read but misses some data. For precision, have a real estate agent or appraiser pull comps from MLS — they have better filters and more data.
Adjusting Comps for Differences
No comp is identical. You adjust for differences using price-per-square-foot math and feature adjustments:
| Feature Difference | Typical Adjustment |
|---|---|
| Square footage | $50–$100/sq ft depending on market |
| Bedroom (extra) | +$8,000–$15,000 |
| Bathroom (extra) | +$5,000–$10,000 |
| Garage (2-car vs. none) | +$10,000–$20,000 |
| Basement (finished) | +$15,000–$30,000 |
| Lot size (significant difference) | +/- varies by market |
Adjustments are estimates — use local data when you have it. After 10–15 deals in a market, you'll develop a feel for what each feature is worth.
Common ARV Mistakes That Kill Margins
✗ Using Zestimate as ARV
Zillow's algorithm is accurate at a zip code level but can be off 10–20% on individual properties. Zestimates are not appraisals. Never use them to make a purchase decision.
✗ Using distressed sales as comps
REO sales, short sales, and foreclosures often sell below market. Using them as comps understates ARV — but also means you're comparing to properties that didn't have your renovation quality.
✗ Comparing to active listings, not closed sales
A house listed at $290,000 doesn't tell you what it will sell for. Use closed sales only. What sellers ask and what buyers pay are different numbers.
✗ Assuming top-of-market renovation gets top-of-market price
There's a ceiling in every neighborhood. Upgrading to granite countertops in a neighborhood where no sold comp has granite doesn't mean you'll sell for more — it means your renovation cost more.
The Maximum Allowable Offer Formula
Once you have a confident ARV, calculate the most you can pay:
MAO = (ARV × 0.70) − Rehab Costs
The 70% rule builds in your profit margin, closing costs, holding costs, and a buffer for overruns. Some investors use 65% in competitive markets or 75% on low-risk deals.
Never stretch your MAO because you fell in love with a deal. The numbers either work or they don't. If you need to pay $165,000 and your MAO is $151,000, this is not your deal — move on and find the next one.
Jake Martinez
Fix-and-Flip Investor · 890 posts · REICommunity Contributor
Jake has completed 47 flips across Texas and Arizona. His ARV estimates have been within 3% of actual sale price on 41 of those deals. He's learned from the 6 where his ARV was wrong — and shares those lessons here.
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