What the property will be worth once the rehab is done.
The After Repair Value (ARV) is the projected market value of a property after a planned rehab or construction project is complete. ARV is the most important number in fix-and-flip and value-add lending because both the lender's downside protection and the operator's profit are measured against it.
ARV underpins the most common rule in real estate investing — the 70% Rule: the maximum a flipper should pay for a property is 70% of ARV, minus rehab costs. The 30% spread covers carrying costs, financing, selling costs, and the operator's profit. Lenders rely on the same math when sizing a fix-and-flip loan, typically capping the loan at 70–75% of ARV regardless of how high the LTC goes.
ARV is a forward-looking estimate, which is why lenders demand it be supported by recent comparable sales ("comps") — typically three to six closed sales within the last six months, in the same neighborhood, of similar size, condition, and finish level. The appraiser then makes adjustments for differences (lot size, finished basement, garage, etc.) to arrive at a defensible number.
The most common ARV mistakes are using comps that aren't actually comparable (different school district, different finish tier), using listings instead of closed sales, or assuming a renovation will push the property above the neighborhood's ceiling. A property in a $300k neighborhood doesn't become a $450k house just because the finishes are nice — buyers won't pay it.
On the lender side, ARV drives the back-end cap of every rehab loan. A loan can be 90% LTC and still be safe if it's 65% of ARV; the same loan at 80% of ARV is a different risk profile entirely. Matrix Commercial Capital underwrites every fix-and-flip and value-add loan with both LTC and ARV caps, and the lower of the two governs.
| Projected ARV (based on 3 closed comps) | $385,000 |
| × 70% | $269,500 |
| – Rehab budget | ($75,000) |
| Maximum offer price (per 70% rule) | $194,500 |
| Actual purchase price | $185,000 |
| Total cost (purchase + rehab) | $260,000 |
| Projected gross profit ($385k – $260k – ~10% sale costs) | ~$86,500 |
The 70% rule says a flipper should pay no more than 70% of ARV minus rehab costs. So if ARV is $400k and rehab is $60k, max offer is (400k × 0.70) – 60k = $220k. The 30% spread covers financing, holding costs, selling costs, and profit.
Pull 3–6 closed sales (last 6 months) of finished properties in the same neighborhood with similar bed/bath count and square footage. Calculate price per square foot for each comp, average them, and multiply by your subject property's projected finished square footage. Adjust for major differences (lot size, garage, basement).
No — every legitimate lender orders an independent appraisal that includes an "as-completed" or ARV value, performed by a licensed appraiser using closed comparable sales. Your number is the starting point; the appraiser's number is the binding one.
The loan gets re-sized. If your loan was 70% of a $400k ARV ($280k), and the appraisal comes in at $375k, the loan caps at $262,500. The borrower brings the difference to close or restructures the deal.
Market value is "as-is" today. ARV is "as-completed" — the value the property will have after a defined scope of repairs/renovation is finished to a specified standard. ARV always assumes the project is done.
Matrix's fix-and-flip program funds up to 90% of purchase, 100% of rehab, with a 75% LTARV cap. Fast appraisal turn, real draw management, and pricing built for repeat operators.
