Estimate after repair value from comparable sales — for BRRRR refis and house flips
After Repair Value (ARV) is what a property will appraise for once renovations are complete. It's the foundation of every BRRRR and fix-and-flip deal — your refinance loan or sale price is based on ARV, not what you paid.
The standard method is comparable sales analysis. Pull 3+ recent sales (within the last 6 months) of similar properties within ~0.5 miles of the subject. Adjust for square footage, bed/bath count, condition, and lot size. The average price-per-square-foot of comps, applied to your subject's square footage, produces a defensible ARV estimate.
The 70% rule is the classic BRRRR/flip filter: your maximum all-in cost (purchase + rehab) should be ≤ 70% of ARV. That leaves 30% for refinance closing costs, holding costs, and profit. The MAO (maximum allowable offer) is calculated as: ARV × 0.70 − rehab budget.
BRRRR refinance math: most lenders refinance investment properties at 75% loan-to-value (LTV) of the new appraised ARV. If your total in (purchase + rehab + holding costs) is below 75% of ARV, you can recover all your cash at refinance and effectively own the property with no money left in the deal. That's the BRRRR win condition.
Where ARV estimates go wrong: relying on the seller's ARV claim instead of pulling fresh comps, using outdated sales (markets shift quickly), choosing comps that don't match condition (a fully-renovated comp vs your livable-but-dated subject), and ignoring functional differences (garage vs no garage, basement vs slab, school district boundaries). Always verify comps yourself via county records or MLS — never trust a wholesaler's number.