What This Tool Calculates
The After Repair Value (ARV) is the estimated market value of a property after completed repairs and renovations. House flippers and small investors use ARV to determine how much they can offer for a distressed property while still leaving room for profit.
This calculator applies a simple formula: it takes the average price per square foot from similar sold properties (comps) and multiplies it by the subject property’s square footage. The result is a baseline estimate of what the property could be worth once fixed up.
This tool does not account for every variable. Location, condition, unique features, and market trends all influence final sale price. Use the result as a starting point, not a guarantee.
How to Use the Calculator
Input 1: Average Comp Price Per Sq Ft
Enter the average dollar amount per square foot from your comparable sales. To get this number, find 3–5 recently sold properties in the same area that are similar in size, age, and condition. Calculate their individual $/sqft values, then average them.
Example: If three comps sold for $200,000 (1,000 sqft), $225,000 (1,100 sqft), and $190,000 (950 sqft), the individual ratios are $200, $204.55, and $200. The average is approximately $201.52 per sq ft. Enter that number here.
Input 2: Subject Property Sq Ft
Enter the total finished square footage of the property you are analyzing. This should be the living area, not including garage, unfinished basement, or outdoor spaces unless those are typically counted in your market.
Reading the Result
The calculator multiplies the two inputs and displays an estimated ARV.
Formula:
ARV = Average Comp $/Sq Ft × Subject Property Sq Ft
If you enter an average comp price of $200/sq ft and a subject property of 1,200 sq ft, the result is $240,000. This means that, based on the comps you provided, the property could be worth roughly $240,000 after repairs.
Compare this estimated ARV to your purchase price plus repair costs. If the numbers do not support your target profit margin, you may need to adjust your offer or look for another property.
Worked Example (Hypothetical)
Scenario: You are analyzing a distressed property listed at $180,000. It has 1,400 sq ft of living space.
Step 1 – Find comps. You locate three recently sold, renovated homes in the same neighborhood:
| Comp | Sale Price | Sq Ft | $/Sq Ft |
|---|---|---|---|
| A | $260,000 | 1,300 | $200.00 |
| B | $275,000 | 1,400 | $196.43 |
| C | $250,000 | 1,250 | $200.00 |
Step 2 – Calculate average comp $/sq ft.
($200.00 + $196.43 + $200.00) ÷ 3 = $198.81 per sq ft (round to $199 for simplicity).
Step 3 – Enter inputs.
- Average comp $/sq ft: 199
- Subject property sq ft: 1,400
Step 4 – Result.
$199 × 1,400 = $278,600 (Example: ARV ≈ $278,600).
Step 5 – Evaluate.
If your total invested capital (purchase + repairs) is $200,000 and your target profit is $30,000, you would need an ARV of at least $230,000 to hit your goal. In this example, the estimated ARV of $278,600 provides a cushion of nearly $48,000 above your breakeven point.
Note: All numbers above are hypothetical illustrations only.
Common Mistakes
1. Using too few or unrelated comps. If your comps are from a different neighborhood, a different housing tier, or sales that occurred more than six months ago, the $/sq ft average will be misleading. Aim for 3–5 comps sold within the last 3–6 months in the same sub-market.
2. Forgetting to calculate $/sq ft. Some users enter the sale price of a single comp and the subject property’s sq ft, then are surprised by the result. Always average multiple comps first.
3. Including unfinished space. Garages, unfinished basements, and porches should generally be excluded from the sq ft total unless your local market routinely includes them in listings.
4. Ignoring market shifts. A comp sold a year ago may not reflect current demand. If the market is rising quickly, your ARV may be higher than historical comps suggest; if it is declining, the opposite is true.
5. Treating the result as final. The calculator provides an estimate. The actual sale price after renovation can vary based on buyer preferences, final finish quality, and pricing strategy.
Repair / Rehab Cost Estimating
The ARV calculator does not subtract repair costs. To use ARV in a full financial model, you must estimate repair (rehab) costs separately. Common line items include:
- Structural repairs (roof, foundation, windows)
- Kitchen and bathroom updates
- Flooring, paint, and cosmetic finishes
- Permits and inspection fees
- Contingency (typically 10–20% of total repair budget)
Create a repair budget before you finalize your offer. Subtract the estimated repair total from the ARV, then subtract your target profit and any financing costs. The remaining amount is your maximum allowable offer (MAO).
Holding and Closing Costs
Even with a solid ARV, flip projects carry ongoing expenses while the property is in your name. These may include:
- Mortgage interest or hard money loan interest
- Property taxes and homeowner’s insurance
- Utilities (if applicable)
- HOA fees, if the property is in a managed community
- Carrying costs during the renovation period and while the property lists for sale
Factor these into your overall profit projection. A common rule of thumb is to budget 8–12% of the purchase price per month for holding costs, but actual costs vary by location and loan type.
Financing: Hard Money and Private Money
Many investors use short-term financing to acquire and renovate flip properties. Options include:
- Hard money loans: Asset-based loans secured by the property. Terms are typically 6–18 months, with interest rates and fees that reflect the higher risk.
- Private money: Funds from individuals or investment groups. Terms are negotiable and can be more flexible than institutional loans.
Lenders often require a clear exit strategy—typically a sale at or near the projected ARV—before approving funding. Have your ARV estimate, repair budget, and timeline ready when speaking with a lender.
Permits and Local Rules
Before starting renovations, verify that the work you plan requires permits in your jurisdiction. Unpermitted work can create title issues, delay sales, or result in fines. Check with your local building department for:
- Required permits for electrical, plumbing, and structural changes
- Occupancy requirements after renovation
- Rental licensing rules, if you plan to hold the property
Taxes on Flip Profits
Profits from flipping real estate are generally taxed as ordinary income, not long-term capital gains, unless you qualify for a special exception. Consult a qualified tax professional about:
- Self-employment tax implications
- Depreciation recapture
- State and local tax obligations
Tax rules vary by situation and location. Get personalized advice before relying on any general guidance.
When to Talk to a Lender
If your numbers look promising and you plan to use financing, reach out to a lender after you have:
- A purchase price and ARV estimate
- A detailed repair budget
- A realistic timeline for renovation and sale
A lender can pre-qualify you, explain loan terms, and help you understand how much they are willing to lend based on the as‑after‑repair value. This step can save time and prevent you from contracting on a property you cannot fund.
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Disclaimer: This tool provides estimates based on input data and is for informational purposes only. It is not financial, legal, or tax advice. Always consult qualified professionals before making investment decisions. Results are not guarantees of profit or performance.