What is ARV?+
ARV (After Repair Value) is the estimated market value of a property AFTER renovations are complete. It's the price the property would sell for once it's been fully fixed up — based on comparable sales of similar, already-renovated properties in the same market.
How do I estimate ARV?+
Use comparable sales (comps) within 0.5-1 mile, sold in the last 3-6 months, with similar size and finish. Get 3-5 comps minimum. Calculate $/sqft for each, then apply the median or weighted average to your subject property's sqft. That's your ARV estimate. Adjust upward or downward for differences (extra bedroom, finished basement, garage, lot size).
How many comps should I use?+
3-5 minimum. Anything less and you're over-indexing on individual outliers. Anything more and you're stretching too far geographically or in time. The goal is enough comps to identify the median range, not enough to bias.
What makes a 'good' comp?+
Same neighborhood (sub-area, not just city). Sold within the last 3-6 months (max 12 if market is slow). Within ±20% of subject sqft. Same property type (SFH vs duplex vs condo). Similar finish level (renovated comps for ARV, not 'as-is' comps). Active or pending listings can supplement but don't replace closed sales.
How do I adjust for differences between comp and subject?+
Standard adjustments: +/− $X per bedroom (often $5-15k), +/− per bathroom, +/− per 100 sqft, garage (+$5-15k typically), basement finish (+$10-25k), pool, view, lot premium. Adjustments are art, not science — use multiple methods and triangulate. Better to use $/sqft on similar properties than over-engineer adjustments.
Why does ARV matter so much in BRRRR and flips?+
ARV is the single biggest assumption in BRRRR and flip math. Inflate ARV by 10% in your model and your projected profit can double; deflate it by 10% and you might be underwater. The refinance appraisal (in BRRRR) or actual sale price (in flips) tests your ARV assumption with real money. Get it wrong and the whole deal unwinds.
Should I use Zillow Zestimate as ARV?+
No. Zestimate is automated and notoriously inaccurate for non-cookie-cutter properties. It also doesn't distinguish between renovated and unrenovated condition. Use it as a sanity check (within 15% should be a yellow flag), never as the primary ARV. Manual comp pull is the only defensible method.
Can the appraiser come in below my ARV?+
Yes — happens regularly. Appraisers are conservative, especially in slow markets. Plan for ARV to come in 5-10% below your model; if you can't survive that, walk. Pre-appraisal conversations with your lender's appraiser (providing them your comps in advance) can help align expectations but won't force a higher value.
How is ARV different for multifamily (5+ units)?+
Multifamily 5+ units is valued on the income approach (NOI ÷ cap rate), not residential comps. To force ARV on multifamily, you raise NOI through rent increases, expense reductions, or operational improvements — and the new value is NOI ÷ market cap rate. Residential ARV methodology (comp-based) only applies to 1-4 unit properties.