After Repair Value (ARV) Calculator

Understanding ARV and MAO in Real Estate

For real estate investors, particularly "flippers," the After Repair Value (ARV) is the estimated value of a property after all necessary repairs and renovations are completed. It is the cornerstone metric used to determine if a distressed property is worth buying.

The 70% Rule and MAO

A common rule of thumb in flipping is the 70% Rule. This states that an investor should pay no more than 70% of the ARV of a property, minus the cost of repairs. This ensures a 30% margin to cover holding costs, closing costs, realtor commissions, and profit. This resulting figure is called the Maximum Allowable Offer (MAO).

Worked Example

1. Comparable ARV: $200,000
2. Repair Costs: $30,000
3. Expected Profit Margin: 30%
4. MAO = ($200,000 × 0.70) - $30,000 = $110,000.
5. If you buy the house for $100,000 (which is under your MAO), your estimated profit margin expands.

Frequently Asked Questions

How do I determine the comparable ARV?

You must look at recent "comps" (comparable sales) in the exact same neighborhood. The comps should be recently renovated homes with a similar square footage, bedroom/bathroom count, and lot size.

Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.