Every calculation in a BRRRR or fix-and-flip deal flows from one number: After Repair Value (ARV). It determines your maximum purchase price (via the 70% rule), how much you can pull out in a refinance, and whether the deal is profitable at all. Getting it wrong by even 10% can turn a home run into a disaster.
The good news: estimating ARV isn't guesswork. It's a systematic process based on comparable sales data. Here's how to do it step by step.
Step 1: Define What Your Property Will Look Like After Renovation
Before you can estimate what a property will be worth, you need a clear picture of what it will become. A cosmetic refresh (paint, flooring, fixtures) results in a different ARV than a full gut renovation that adds a bedroom and modernizes the layout.
Write down your planned renovation scope: how many bedrooms and bathrooms the finished property will have, the approximate finished square footage, the quality level of finishes (builder grade, mid-range, or high-end), and any major changes like additions, layout modifications, or garage conversions.
This becomes the profile you'll match against comparable sales.
Step 2: Find Comparable Sales (Comps)
Comps are recently sold properties that are similar to what your property will be after renovation. The closer the match, the more reliable your ARV estimate.
Where to find comps:
MLS (via an agent): The most reliable source. Ask a real estate agent to pull sold comps — they have access to the full MLS data including sold prices, days on market, concessions, and interior photos.
Zillow, Redfin, Realtor.com: Free and available to anyone. Filter by "Recently Sold" and narrow to the last 3-6 months. These show sold prices (not just list prices) for most markets.
County records: Public record of all property transfers. Useful for verifying sale prices but usually lacks property condition details.
PropStream, DealMachine, Privy: Investor-focused tools that combine MLS data with county records and make comp analysis faster.
What makes a good comp:
| Criteria | Ideal | Acceptable | Avoid |
|---|---|---|---|
| Distance | Same street/block | Within 0.5 miles | Over 1 mile |
| Sale Date | Last 30-90 days | Last 3-6 months | Over 6 months |
| Square Footage | Within 10% | Within 20% | Over 25% different |
| Bed/Bath Count | Same | Within 1 | 2+ difference |
| Property Type | Same (SFH to SFH) | Similar | Different type |
| Condition | Renovated, similar quality | Good condition | Unrenovated/distressed |
Use at least 3 comps, ideally 5. If you can't find 3 solid comps, your ARV estimate has too much uncertainty — proceed with extra caution or find a different deal.
Step 3: Adjust Comps for Differences
No comp will be a perfect match. You need to adjust for meaningful differences between each comp and your subject property. The adjustments are applied to the comp's sale price — add value for things your property has that the comp doesn't, subtract for things the comp has that yours won't.
| Difference | Typical Adjustment |
|---|---|
| Square footage | $75–$200 per sq ft (market dependent) |
| Extra bedroom | +$10,000–$25,000 |
| Extra bathroom | +$8,000–$20,000 |
| Garage (2-car vs none) | +$15,000–$30,000 |
| Lot size (per 1,000 sq ft) | +$2,000–$10,000 |
| Pool | +$10,000–$30,000 (climate dependent) |
| Basement (finished) | +$15,000–$40,000 |
| Age difference (per decade) | -$5,000–$15,000 for older |
These are rough ranges — your local market will have its own price-per-square-foot and feature premiums. An experienced local agent or appraiser can help you calibrate these numbers for your specific area.
Your property (after rehab): 3 bed / 2 bath, 1,400 sq ft, no garage
Comp 1: Sold $285,000 — 3/2, 1,500 sq ft, no garage → Adjust -$14,000 (100 sq ft × $140/ft) = $271,000
Comp 2: Sold $298,000 — 3/2, 1,400 sq ft, 2-car garage → Adjust -$22,000 (garage) = $276,000
Comp 3: Sold $265,000 — 3/1, 1,350 sq ft, no garage → Adjust +$15,000 (bath) +$7,000 (50 sq ft) = $287,000
Average adjusted value: ($271K + $276K + $287K) ÷ 3 = $278,000
Step 4: Build in a Margin of Safety
Your ARV estimate is just that — an estimate. Markets shift, appraisals come in differently, and buyers negotiate. Smart investors build in a buffer.
For flips: Use the lower end of your comp range or discount your average by 5%. If your comps suggest $278K, plan for $264K-$270K. You can always be pleasantly surprised by a higher sale price.
For BRRRR: Be conservative because you need the appraisal to hit for your refinance. Appraisers tend to be conservative too — they're not trying to maximize your value. Plan for 5-10% below your estimated ARV when calculating how much cash you'll get back.
Don't cherry-pick your highest comp and call it the ARV. That's confirmation bias. The best comp might sell at the top of the range, but your property is more likely to sell near the middle. Use the average or even the median of your adjusted comps as the baseline.
ARV Red Flags to Watch For
Comps are all over the place. If your 5 comps range from $230K to $340K, the neighborhood doesn't have consistent pricing and your ARV estimate carries high risk. Narrow your comp criteria or find a more predictable market.
Only 1-2 comps exist. If there aren't enough recent sales of similar renovated properties, you're guessing. This often happens in rural areas or with unique property types. Consider whether the market has enough depth to support your exit strategy.
Comps are more than 6 months old. In a rapidly changing market (up or down), old comps can be misleading. Weight more recent sales heavily and check active listings and pending sales for direction.
You're the nicest house on the block. Over-improving for the neighborhood caps your ARV. If every house on the street is valued at $200K-$250K and you're renovating to a $350K finish, you likely won't get $350K. The neighborhood ceiling is real.
Plug In Your ARV and Run the Numbers
Once you have your ARV estimate, enter it into CapRateKit's BRRRR or Fix & Flip calculator to see your max offer price, projected profit, and cash left in the deal.
Try CapRateKit Free →Frequently Asked Questions
Should I use Zillow's Zestimate as my ARV?
No. The Zestimate reflects current condition, not after-repair value. It also has a meaningful error rate that varies by market. Use it as a starting reference at most, then build your own estimate from actual sold comps of renovated properties.
Should I pay for a pre-purchase appraisal?
In most cases, no — a good comp analysis gives you the same information. However, if you're dealing with a unique property, a thin comp pool, or a very expensive deal, a $400-500 appraisal can provide peace of mind before committing $50K+ in capital. Some investors build relationships with appraisers who will give informal opinions for less.
What if the appraiser's value comes in lower than my ARV estimate?
This happens and it's one of the biggest risks in BRRRR. If the appraisal is lower, you'll leave more cash in the deal than planned. You can request a reconsideration of value with additional comps the appraiser may have missed, but there's no guarantee. This is why conservative ARV estimates matter — they protect you from this scenario.
How does ARV differ for BRRRR vs flips?
The ARV calculation is the same, but how you use it differs. For flips, ARV determines your selling price and profit margin. For BRRRR, ARV determines your refinance amount (typically 75% of ARV) and how much cash you recover. In both cases, an accurate ARV is the foundation of the deal.