How Do I Determine ARV?

When looking at purchasing a property for a fix and flip it is important to know what the ARV (After Repair Value) of the property will be after you are done rehabbing the property. The ARV will help dictate how much money you should purchase the property for and how much money you can put into the rehab.

When determining the ARV, you have to pull comparables within the neighborhood or surrounding neighborhoods. By comparables, if you are looking at rehabbing a home that is 1,200 sq. ft. and you aren't going to add square footage, you only look at homes that are near that square footage. It will not help if you are looking at homes that are 3,000 square feet because that won't give you a good idea for what the property will sell for. Choose 5-8 properties that have the following similarities:

  • Square footage
  • Style (ranch, two story, multi-level, etc)
  • Exterior (brick, stucco, vinyl siding, etc) -Unless you plan on changing the exterior of the home
  • Amenities (Backyard, Walkout, Attached or Detached Garage, etc) -Unless you plan on adding a garage or a backyard

After you have identified the 5-8 properties that are very similar to the property you are looking at rehabbing, with the exception of level of finishes and whatever you plan on adding, take the average sold price of the homes. That is your ARV.

To determine if the home will make you a profit, look for our future blogs!

To Stage or Not To Stage

The National Association of Realtors released some information about Home Staging in 2015, here are some points to know

  • Among REALTORS® who typically represent the buyer, 49 percent report most buyers are affected by home staging
  • REALTORS® report that home staging will positively impact the value of the home if it is decorated to the buyer tastes (45 percent) and buyers are more willing to overlook other property faults (28 percent) if staged
  • In order of importance, these are the rooms to be staged: living room, kitchen, master bedroom, dining room, bathroom, children’s bedroom, and guest bedroom
  • $675 is the median dollar amount in 2015 spent on home staging
  • You could find a Real Estate Agent who includes this in their list of services (for some their commission might be a higher rate for this service), or you could spring for this cost as the seller
  • As a real estate investor looking for top dollar resale of their investment, it is something to consider in the budget of the home in order to get more buyers into the home and imagining themselves living there