What is ARV and Why is it Important?

ARV stands for After Repair Value. Whenever taking on a renovation project or investment flip, the first consideration should always be, “What is the value of the asset after the repairs are made?” From this stand point, you can reverse engineer the project to decide if the investment makes sense or needs to be scaled back or modified. Knowing the ARV allows you to have a reasonably good idea of the potential profits that can be made on an investment or the value added to an existing asset. By having this knowledge, you can confidently know the perimeters for a good offer price or if the project is adding monetary value instead of just intrinsic value. Starting at the end and working towards the beginning (offer price or current value) allows you to control your budget and determines the scope and quality of the improvements to be made. In order to be a successful real estate investor, ARV is a necessary concept and should be the first consideration for every project.



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