ARV stands for After-Repair Value — the estimated market value of the property after all planned renovations are complete. It is the single most important number in a fix and flip deal, driving both the maximum loan amount and the potential profit.

How ARV Is Determined

ARV is determined by a licensed appraiser who reviews comparable sales (comps) of similar properties in the area that have already been renovated to the same standard. The appraiser considers square footage, bedroom and bathroom count, location, finishes, and recent sale prices of comparable renovated homes.

Why It Drives the Loan Amount

Fix and flip lenders cap the loan at a percentage of ARV (typically 65%–75%) because the ARV represents the value of their collateral once the project is complete. If the deal goes wrong and the lender has to take the property, they want to know the renovated value supports their loan amount.

Why the ARV Drives Profit

Your profit is the difference between ARV (your sale price target) and your total all-in costs. Getting the ARV right — not too optimistic, not too conservative — is the foundation of sound fix and flip underwriting. Overstating the ARV leads to underestimating the loan-to-value risk and overestimating your profit.

ARV vs. As-Is Value

The as-is value is the current value of the property in its present condition. For a distressed property, this may be significantly below ARV. The spread between as-is and ARV represents the renovation value-add — and the investor’s opportunity.