After Repair Value (ARV): How to Estimate It and Use the 70% Rule (2026)

After repair value (ARV) is what a property should be worth once a planned renovation is finished. This page covers how to estimate it from comparable sales, the 70% rule for a maximum purchase price, a full deal worksheet with a worked example, and how ARV sets the refinance in a BRRRR deal. It is part of WealthNorth’s guide to investment property financing. How the profit on a flip is taxed is covered in house flipping taxes, and buying distressed properties in how to buy a foreclosure.

The ARV formula

$$\text{ARV} \approx \text{Average price of renovated comparables, adjusted for differences from your property}$$

$$\text{Maximum Purchase Price} = (\text{ARV} \times 70%) - \text{Renovation Costs}$$

How to estimate ARV: step by step

Step 1: Find comparable sales (comps)

Your comps should be:

Step 2: Analyze the comps

Step 3: Make adjustments

The 70% rule explained

The 70% rule provides a quick maximum purchase price:

$$\text{Max Purchase Price} = (\text{ARV} \times 0.70) - \text{Repair Costs}$$

Why 70%?

The 30% buffer accounts for:

A contingency for surprises is usually built into the repair estimate rather than this 30%.

70% rule examples

When investors adjust the 70% rule

The 70% figure is a rule of thumb, not a standard. Investors use a lower percentage (a bigger buffer) when sales are slow, holding costs are high, or it is their first project, and sometimes a higher one where properties sell quickly or transaction costs are a smaller share of a high price. The worksheet below replaces the rule with the actual costs of a specific deal.

Renovations and value

Not every dollar spent adds a dollar of value. Cosmetic work (paint, flooring, lighting, fixtures) and kitchens and bathrooms tend to move the sale price most, because buyers compare them directly with renovated comparables. Necessary work such as a roof, furnace, windows or wiring protects the price but adds less than it costs. Base the ARV on comparables finished to the same level you can afford, and price the work with contractor quotes rather than averages.

ARV worksheet

Use this to calculate your deal:

Example deal analysis

This deal works but the margin is thin. Finding the property for $350,000 instead of $370,000 (with Ontario land transfer tax of $3,725 instead of $4,025) would improve profit to $52,175 (10.9% ROI).

Common ARV mistakes

1. Using comps that are too far away: one block can make a huge difference
2. Using sold prices from more than 3 months ago: markets change
3. Overestimating your renovation level: if comps have high-end finishes and your budget only allows mid-range, your ARV estimate is inflated
4. Ignoring negative adjustments: busy street, no parking, smaller lot all reduce ARV
5. Cherry-picking the highest comp: use the average or conservative end of the range
6. Underestimating renovation costs: always add 15%–20% contingency
7. Forgetting holding and transaction costs: these can eat 8%–12% of ARV

ARV for BRRRR investors

In the BRRRR strategy (buy, renovate, rent, refinance, repeat), the ARV sets how much you can borrow when you refinance: Under the Bank Act, a bank's loan to buy, renovate or improve a home, or a refinance of such a loan, together with any mortgage ranking equal to or ahead of it, can't exceed 80% of the home's value.

Example: buy at $350,000 with 20% down, the minimum without default insurance ($70,000 cash and a $280,000 mortgage), spend $60,000 renovating, and the property appraises at $530,000. A refinance at 80% of $530,000 is $424,000. Paying off the $280,000 original mortgage leaves $144,000, more than the $130,000 of cash put in, before closing, holding and refinance costs. If the appraisal comes in 10% lower, at $477,000, the refinance is $381,600 and only $101,600 comes back, leaving $28,400 in the deal. Lenders’ seasoning rules decide when they will use the new value; see rental property mortgages for refinancing a portfolio.