After-repair value (ARV) is the number that makes or breaks a fix-and-flip — and the number most investors get wrong. Lenders underwrite to your ARV story, but appraisers underwrite to sold comps. When those diverge by 10%, your 90% LTC file becomes an 80% file overnight.
This guide explains how to build a defensible ARV before you request proof of funds or submit an offer. For leverage mechanics once ARV is set, see understanding LTV and LTC and our fix and flip programs.
What ARV actually means
ARV is the expected market value of the property after you complete the rehab scope you plan to fund — not today’s as-is value, not the highest Zillow “zestimate,” and not what the listing agent hopes a bidding war produces.
Hard money and fix-and-flip lenders use ARV to cap loan-to-value after repair. Typical structure:
| Leverage band | Based on |
|---|---|
| 90% LTC | Lesser of purchase + rehab vs. ARV cap (often 70–75% of ARV) |
| 100% rehab holdback | Documented scope with draw milestones |
| Exit margin | ARV minus all-in cost minus carry and selling costs |
If ARV is inflated, you overpay on acquisition or underfund rehab — both end in extension fees or a short sale.
The three-comp rule (minimum)
Build ARV from at least three sold comps that a licensed appraiser would credibly use:
- Same neighborhood — same ward, school district, or suburban submarket; not “within five miles” unless rural
- Similar product — brick two-flat vs. brick two-flat; not ranch vs. colonial
- Sold within 90 days — 180 in slow markets; adjust for seasonality
- Similar GLA and bed/bath — within 10–15% square footage
- Similar condition post-rehab — compare to renovated sales, not as-is distress
Pull comps from MLS, county recorder, or a credible third-party platform — then open each listing and note condition, basement, garage, and lot.
Adjustment grid (simplified)
Start with each comp’s sold price, then adjust to your subject:
| Factor | Typical adjustment direction |
|---|---|
| Extra bed/bath | +$8K–$25K per unit (market-dependent) |
| Garage vs. no garage | +$10K–$30K in Midwest urban markets |
| Finished basement | +$15K–$40K if legal and dry |
| Smaller/larger GLA | $50–$120 per sq ft delta (use local appraiser norms) |
| Inferior/superior location | ±5–15% of comp price |
| No central air / updated mechanicals | −$8K–$20K if your subject will have new systems |
Average the adjusted values. Your ARV should cluster — if comps span $320K–$380K after adjustment, underwriting $395K requires a written justification (water view, ADU, etc.).
Automated ARV tools — useful, not gospel
Instant ARV widgets and AVMs are starting points. They excel at:
- Flagging whether a market is $180K or $280K before you drive the property
- Screening bulk acquisitions in unfamiliar metros
They fail when:
- Condition variance is extreme (fire, foundation, flood)
- Small multifamily or mixed-use lacks AVM training data
- New construction or recent zoning changes reset the comp set
- Rural or lakefront properties have sparse sales
Rule: if an automated ARV exceeds your manual comp average by >5%, trust your manual work unless you can name the premium feature.
Worked example — suburban ranch flip
Subject: 1,450 sq ft ranch, 3/2, no garage, needs full interior + mechanical
As-is purchase target: $165,000
Rehab budget: $55,000
| Comp | Sold | GLA | Adjustments | Adjusted |
|---|---|---|---|---|
| A | $278,000 | 1,520 | −$4K GLA, −$12K no garage vs. A | $262,000 |
| B | $295,000 | 1,480 | −$2K GLA, −$12K garage | $281,000 |
| C | $268,000 | 1,400 | +$2K GLA, −$12K garage | $258,000 |
Indicated ARV: ~$267,000 (conservative) to $281,000 (upper)
All-in: $220,000 + $18K carry = $238,000
Spread at $267K ARV: ~$29K before selling costs — workable for an experienced flipper; tight for a first deal.
When to call the lender before you offer
Contact us when:
- ARV supports ≥70% LTV after repair with your planned scope
- You have three comps saved as PDFs or MLS sheets
- Rehab scope is line-itemed — not a single “$60K rehab” guess
- You know whether exit is resale or BRRRR/DSCR — ARV vs. stabilized value differ on multifamily
Get pre-qualified with your comp packet and scope. We will stress-test ARV against recent files in your submarket before you waive inspection.
Common ARV mistakes on fix-and-flips
- Using active listings instead of sold prices
- Comping Wicker Park finishes in Englewood basis — different buyer pool
- Ignoring transfer tax, commission, and carry in profit math
- Assuming 100% of rehab increases value dollar-for-dollar
- Forgetting reassessment after major rehab in Cook County
Next steps
- Pull three sold comps and build an adjustment grid
- Set ARV at the conservative cluster unless you have a defensible premium
- Model all-in cost, carry, and selling costs at 6%–8% of ARV
- If spread works, request proof of funds and submit your offer
Questions on a specific address? Call (833) 264-7776 with your comp sheet — we will tell you whether the ARV story matches what our appraisers see in your market.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon receipt of appraisal payment and satisfaction of borrower conditions. Closing times may be delayed due to appraiser property access . All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.
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Jaken Finance Group, 2300 Barrington Road, Suite 400, Hoffman Estates, IL 60196