Calculating After Repair Value (ARV) is an important part of the real estate investing equation. The basics of figuring ARV allows you to understand what a house will bring from buyers or investors after the rehab process.
One starting point is to get a Brokers Price Opinion on the property. You can get this either from the area MLS or from a broker partner. A BPO is an estimate of the home’s future value. The opinion gives you an assessment of similar homes in a similar location.
Once you have comparable properties, you can really dig into making an accurate ARV by researching the other homes and taking some of the following steps:
-Does the neighborhood look comparable to your property neighborhood?
Put yourself in your future buyers shoes.
-Does your property’s neighborhood look trashy compared to others?
-Does the other property have the same number of bedrooms and bathrooms as yours?
-Does your property have the same amenities; garage, finished basement, or a fenced in backyard, etc.?
-When was the comparable built compared to your subject property?
-Is your subject property an older style home? Have all the other properties in the area been upgraded on the outside? Are you behind the times?
-Can you make your subject property look like the comparables you are using? How much work and investment will that take?