I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Call (800) 239-1103.
After-repair value (ARV) is the single most important number in a fix-and-flip deal. Get it right and you know exactly what you can pay. Get it wrong and you can lose money even on a well-executed flip. Here’s how professional California flippers calculate ARV. See also: CA Fix & Flip Loans | Hard Money Loans CA.
Step 1: Pull Comparable Sales (Comps)
Find 3–5 properties within ½ mile that sold within the last 6 months (12 months max in slower markets). Comps must be same property type (SFR to SFR), similar square footage (±15%), and similar bedroom/bath count. In California’s dense urban markets, you can tighten to ¼ mile; in rural or low-volume areas you may need to expand to 1 mile and accept older sales with a time adjustment. The goal is to find what a renovated version of your property would sell for today — not what the neighborhood sold for 18 months ago.
Step 2: Adjust for Differences
No comp is a perfect match. Make dollar adjustments for every meaningful difference: square footage ($100–$200/sqft in most CA markets), bedroom and bath count (a half bath adds $8,000–$15,000 in most markets), lot size, garage capacity, pool, condition, view, and proximity to noise or commercial uses. For each comp, estimate what it would have sold for if it were your subject property after full renovation. The average of those adjusted values is your ARV.
Step 3: Apply the 70% Rule to Find Your Maximum Offer
Maximum purchase price = (ARV × 70%) – rehab costs
Example: ARV = $650,000. Rehab = $85,000. Max purchase = ($650,000 × 70%) – $85,000 = $455,000 – $85,000 = $370,000.
The 70% rule builds in margin for carrying costs (hard money interest, taxes, insurance), California selling costs (8–10% of ARV in agent commissions + title/escrow), and your profit target. It’s deliberately conservative — and in competitive acquisition environments, experienced investors sometimes stretch to 72–75% on deals with very clear ARV and low rehab risk.
ARV vs. Quick Sale Value
ARV assumes full retail price with normal days on market (typically 15–45 days in active CA markets). If you need to exit fast — loan maturity, cost overruns, life event — factor in a 5–8% quick sale discount. Build this contingency into your projections from day one so it doesn’t surprise you mid-project. The best California flippers run two scenarios: their target ARV sale and a discounted quick-sale exit. If the deal works in both scenarios, it’s a solid deal.
Common ARV Mistakes California Investors Make
Using pending sales instead of closed sales (prices can fall between contract and close). Comparing to remodeled comps when your renovation scope is lighter. Using comps from a different school district (school boundaries matter enormously in many CA markets). Ignoring seasonal market variation. And most commonly: using one comp instead of three to five. A single outlier comp can distort your ARV by $50,000–$100,000. Always use a range of comps and weight them by proximity, recency, and similarity.
Ready to Finance Your California Flip?
Bring me your deal numbers — ARV, purchase price, rehab estimate — and I’ll tell you in the first conversation whether the deal pencils and what loan structure fits.
Frequently Asked Questions
What is ARV and why does it matter for a California fix-and-flip?
ARV (after-repair value) is the estimated market value of a property after all planned renovations are complete — the price a retail buyer would pay for a fully renovated version of your flip property. It’s the most important number in any fix-and-flip deal because it determines: (1) how much you can pay for the property using the 70% rule, (2) how much your hard money lender will loan you (most CA hard money programs cap at 65–70% of ARV), and (3) whether the deal has enough margin to cover carrying costs, selling costs (8–10% in CA), and profit. An ARV that’s 10% too high can turn a profitable deal into a losing one even if the renovation is executed perfectly. Professional California flippers get ARV from 3–5 recent comparable sales adjusted for property differences — not from online estimates or asking prices.
How do I find comparable sales (comps) for a California fix-and-flip?
The best comps come from the MLS — ask your real estate agent to pull closed sales within ½ mile of your subject property from the last 6 months. Filter for same property type (SFR to SFR), similar square footage (±15%), similar bedroom and bathroom count, and similar condition (post-renovation, not distressed). Zillow and Redfin show some sold prices but miss off-market sales and may have data errors. For serious deal analysis, MLS access through a licensed agent or a data subscription (PropStream, BatchLeads) gives you better data. If your market has low sales volume — fewer than 5 comparable closings in the last 6 months — you may need to expand your search radius to ¾ or 1 mile and make time adjustments for older sales.
What is the 70% rule for California fix-and-flip deals?
The 70% rule is the standard framework for calculating the maximum purchase price on a fix-and-flip: Maximum Offer = (ARV × 70%) − Estimated Rehab Cost. The 30% margin covers your hard money carrying costs (interest, points), California selling costs (real estate commissions + title/escrow = 8–10% of ARV), and your target profit. Example: $650,000 ARV property needing $85,000 in renovation → Maximum offer = ($650,000 × 0.70) − $85,000 = $455,000 − $85,000 = $370,000. The 70% rule is deliberately conservative — it protects against renovation overruns and a slower-than-expected sale. Experienced California flippers sometimes stretch to 72–75% on deals with very clear ARV, minimal renovation risk, and strong buyer demand, but first-time investors should stay at 70% or below until they have a track record.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
