However, you won’t necessarily know exact costs and, due to external factors, the market can fluctuate significantly the resultant estimate isn’t always accurate.

In order to calculate ARV, you must factor in local market conditions and the costs of the repairs that need to be undertaken. This is an important metric for real estate investors as it allows them to determine the potential value of an investment property after repairs and calculate the maximum price they can pay for the property and still make a profit. As the name suggests ARV in real estate is the calculation to determine the value of a property after repairs have been completed.