After Repair Value is a calculation performed by real estate investors when evaluating a rehab project or investment property. Flipping homes frequently requires repairs in order to make the home more appealing to your buyer or tenant. The ARV (After Repair Value) is simply what the house would sell for if it were already repaired and in average condition for the area.
I think it is important that our investors do not miscalculate ARV, because it determines whether or not a rehab project is going to be a winner or loser. Using the real estate comps in InvestorCompsOnline and Know Your ARV.com will allow you to analyze the data for your potential deal BEFORE you buy. Remember, you make your profit when you buy, so you have to buy wisely.
You can calculate ARV yourself using InvestorCompsOnline. You need an adequate amount of comparable sales that are recent for that particular location. A good rule of thumb (if the property is not rural) is to find 4-6 comparable homes that sold in the past 6 months, and within a mile. The closer a home is to your subject property, the more value you should give it. Also the more recent a comparable sale is the better.
Once you know your ARV you can work towards seeing if your deal is a “deal” or a “dud”.
If you are new or a seasoned investor looking to minimize risk and maximize profit knowing your ARV is vital.
All the best,