If you are someone who is interested in flipping properties, it is always going to be in your best interest to learn all about ARV and what it means moving forward with your real estate investment goals.
Also known as the after repair value, or the fixed-up value, the ARV or after rehab value refers to all of the work that goes into an investment property and the overall value once the remodel is complete. Some of this work will usually include some repairs and cosmetic work, while others will need more extensive remodel and rehab work to be finished. Any successful home flipper will want to look at several areas very carefully, including:
– Whether or not they are capable, as an investor, to take on the repair work themselves, or able to locate and then supervise the right contractors to get all of the work done in the designated period of time.
– Work on accurately estimating the cost that will be involved for the entire remodel and all of the repair work that should be done.
– Determine an accurate estimate of the after rehab value, or ARV, of the property in question.
If you are not to take on all of these steps with confidence and accuracy, you will usually find that you will not be an investor and flipper for very long. You can never let the costs for refurbishment of any property start to run over all of your estimates.
There are a lot of investors that will know the markets and their area very well, and also have confidence in their ability to properly calculate the ARV after they have gone through with the renovations. The highest profit margin in the world of real estate investment will be a fix and flip project. This will require buying a property at a deep discount, along with knowing that you will be able to bring in a good buyer at the price point that you are setting if you want to be able to get the desired profit when all is said and done.
In the middle of any fix and flip project, you will find that the profits can be great, but the risks will also be a great deal higher. These are some great tips that will be helpful when you are trying to get the most out of your fix and flip project:
– Always budget based upon your buyer. If you are going to be selling the property to a rental investor, you can keep the cost of materials at the acceptable range. To sell to the retail consumer market, you will need to look at finishes and upgrades that buyers want so that you can compete.
– Always get the estimates right on materials and buy at discounted pricing whenever possible, including rehab stores and liquidators.
– Get to know your contractors and understand their capabilities and limits. Supervise enough so that you know you will be getting the most return and a great after rehab value (ARV) for the property.