Real Estate Basics: What Does ARV Really Mean?

It’s never been easier to get started with investing in real estate. The information is all out there for you, and many people are beginning their investments by flipping properties! Rehabilitating a property can be an intimidating and time-consuming process, but it’s necessary if you want your investment to have as high of return potentials. Luckily for investors in need rehabilitation services are offered at reasonable rates!

ARV Definition

ARV is an estimate of the property’s value after it has been renovated, restored and rehabilitated. It’s an acronym for “After-Repair Value.” Unfortunately, many first time investors don’t know how to accurately calculate the ARV before they begin a project. They are swinging blindly as their investment evaporates into nothingness because of this oversight!

For those looking to make a killing in the real estate market, it’s important that they really know their local housing situation. That means not just knowing how many homes are for sale but also understanding which ones will go up fastest or have low repair costs – all before calculating an accurate ARV!

How Do You Calculate An ARV?

While the actual ARV may take into consideration some more minute details, there’s a basic formula. Essentially, the ARV is equivalent to the current appraised value of the property added to the value from renovations. Accurately determining both of these values takes experience and can be tricky even to professionals.

Keep in mind, you’re likely purchasing your investment properties far under market value. So the discounted price you pay is not equal to the current appraised value of the home. You can use some simple techniques to figure out the current value of your property. Look at similar homes in nearby areas and analyze how they were priced, sold for on average or median prices over six months ago- this will give you an idea if there’s been any change recently that may affect its value today.

The right contractor will know how to get the most out of your time and materials. As you plan for repairs, be sure that they can estimate costs with market research too! The contractor will also be able to give you a timeline for completing repairs. It’s important to know what time of year you will be putting the property on the market. Warmer months in the spring and summer are often hotter market times and you’re likely to get more return then. If the timeline for renovation completion is placed in the Fall/Winter, you may have to account for a few extra months of holding costs.

Let Florida Property Warehouse Help You

If you’re ready to find your next flip, then the first step is finding a property. This can be both challenging and highly time-consuming! Working with Florida Property Warehouse, one of our experienced agents will match you up to investment properties and find comparable sales for your Flip. We’ve helped hundreds of investors realize their real estate dreams! Our agents are local market experts ready connect people like yourself so they can make informed decisions on what type or property would work best in relation prices-to-pocketbook when investing.

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