How to Calculate ARV Like a Pro: The 70% Rule and Beyond

What Is ARV and Why It's the Most Important Number in Real Estate

After-Repair Value (ARV) is the estimated market value of a property after all renovations are complete. It is the single most important number in any fix-and-flip or BRRRR deal — every other calculation flows from it.

Get the ARV wrong by 10%, and a deal that looked like a $40,000 profit turns into a $15,000 loss. This is why experienced investors spend more time on ARV analysis than any other part of their due diligence.

The 70% Rule: A Starting Point, Not a Final Answer

The classic formula is: Maximum Offer = (ARV × 0.70) − Estimated Rehab Costs

If a property has an ARV of $200,000 and needs $40,000 in repairs, your maximum offer is ($200,000 × 0.70) − $40,000 = $100,000.

The 70% rule is a useful first filter, but it has real limitations. It doesn't account for your specific holding costs, financing costs, or the local market's absorption rate. In a hot market with fast days-on-market, you might safely push to 75%. In a slow market, you may need to pull back to 65%.

How to Pull Accurate Comps

The quality of your ARV is only as good as your comparable sales data. Here's the hierarchy of comp sources:

Tier 1 — MLS Sales (Most Reliable): Recent sales of similar properties within 0.5 miles, sold within the last 90 days, with similar square footage (±20%), bed/bath count, and condition. Use a tool like PropStream to pull MLS comps even without an agent license.

Tier 2 — Active Listings: Active listings tell you what the market is currently pricing similar homes at. They represent the ceiling, not the floor.

Tier 3 — Pending Sales: Pending sales are the most current signal of where the market is heading.

The 3-Comp Minimum Rule

Never base your ARV on a single comparable sale. Always use a minimum of three comps and calculate a weighted average. Weight comps more heavily when they are:

• Closer in distance (within 0.25 miles beats 0.5 miles)
• More recent (60 days beats 90 days)
• More similar in size and condition

Adjusting for Renovation Quality

A $200,000 ARV assumes a specific level of finish quality. If your comps were fully renovated with granite counters, stainless appliances, and luxury vinyl plank floors, but you're planning a budget renovation, your actual ARV will be lower.

Use DealCheck to model multiple renovation scenarios and see how each finish level affects your projected profit. The built-in comp tool lets you adjust for square footage, condition, and amenities automatically.

The Absorption Rate Factor

Absorption rate measures how quickly homes are selling in your target market. If there are 50 homes for sale and 10 sell per month, the absorption rate is 5 months. A high absorption rate (under 3 months) supports aggressive ARV assumptions. A low absorption rate (over 6 months) demands conservatism.

A Real Deal Example

Property: 3/2, 1,450 sq ft, Auburn, AL Purchase Price: $95,000 Estimated Rehab: $45,000 Comp 1: $215,000 (sold 30 days ago, 0.3 miles, 1,480 sq ft, fully renovated) Comp 2: $205,000 (sold 45 days ago, 0.4 miles, 1,400 sq ft, updated kitchen) Comp 3: $220,000 (sold 60 days ago, 0.2 miles, 1,500 sq ft, full renovation)

Weighted ARV: $213,000 70% Rule Check: ($213,000 × 0.70) − $45,000 = $104,100 max offer Actual Offer: $95,000 ✓ — $9,100 under the 70% ceiling

Projected Profit: $213,000 − $95,000 − $45,000 − $18,000 (holding/closing) = $55,000

Run this same analysis instantly using DealCheck's fix-and-flip calculator — it handles the comp adjustments, holding cost calculations, and profit projections in one screen.