What is After Repair Value (ARV)?

After Repair Value

What is After Repair Value (ARV)?

After-repair value (ARV) is the estimated value of a property after it has been repaired, renovated, or updated. It is a key metric used by real estate investors, particularly those who flip houses, to determine the potential profit on a property.

To calculate ARV, investors typically start by conducting a comparative market analysis (CMA) of similar properties in the area. This will give them an idea of the current market value of a property in its current condition. The next step is to estimate the cost of the repairs or renovations that need to be made. Once the cost of repairs is known, the investor can subtract it from the market value to arrive at the ARV.

For example, let’s say an investor is considering buying a house that is currently worth $200,000 in its current condition. The investor estimates that the cost of repairs will be $50,000. The ARV of the property would then be $200,000 – $50,000 = $150,000.

How to Calculate ARV

There are a few different ways to calculate ARV. One common method is to use the following formula:

Code snippet

ARV = Market Value - Cost of Repairs

Use code with caution.

Another method is to use the following formula:

Code snippet

ARV = Average Price per Square Foot of Comps * Number of Square Feet

Use code with caution

This formula is useful if there are no recent sales of comparable properties in the area. In this case, the investor would need to estimate the average price per square foot of similar properties in the area.

How to Use ARV

ARV is used by real estate investors to determine the potential profit on a property. If the investor can buy the property for less than the ARV, they will be able to make a profit after the repairs are made. For example, if the ARV of a property is $150,000 and the investor can buy it for $125,000, they will make a profit of $25,000 after the repairs are made.

ARV is also used to secure financing for real estate investments. Lenders will typically want to see that the ARV of a property is at least 20% higher than the purchase price in order to approve a loan. This is because lenders want to make sure that the property will be worth enough to cover the loan in the event that the investor defaults.

alculating ARV accurately and making wise investment decisions.

The Best Software To Help You Use ARV


There are a number of software programs that can help you calculate ARV. Some of the most popular programs include:

  • ARV Calculator by Omni Calculator
  • After Repair Value Calculator by The Investor’s Edge
  • ARV Calculator by Mashvisor
  • ARV Calculator by REpricer
  • ARV Calculator by Roofstock

These programs typically allow you to enter information about the property, such as its location, size, condition, and estimated repairs. The software will then calculate the ARV based on this information.

In addition to these software programs, there are also a number of online calculators that can be used to calculate ARV. These calculators are typically free to use and can be found on a variety of websites.

Here are some of the most popular online ARV calculators:

  • ARV Calculator by BiggerPockets
  • ARV Calculator by Investopedia
  • ARV Calculator by HomeLight
  • ARV Calculator by Mashvisor
  • ARV Calculator by REpricer

These calculators are a quick and easy way to calculate ARV. However, it is important to note that they may not be as accurate as the software programs mentioned above.

When choosing a software program or online calculator to calculate ARV, it is important to consider the following factors:

  • Accuracy: The software or calculator should be accurate in its calculations.
  • Ease of use: The software or calculator should be easy to use and understand.
  • Features: The software or calculator should have the features you need, such as the ability to estimate the cost of repairs and the ability to consider the current market conditions.
  • Price: The software or calculator should be affordable.

By considering these factors, you can choose the best software or calculator to help you calculate ARV and make informed investment decisions.

Conclusion

After repair value is a valuable tool for real estate investors. By understanding how to calculate ARV, investors can make more informed decisions about which properties to buy and how much to pay for them. This can help investors to maximize their profits and minimize their risks.

Here are some additional tips for calculating ARV:

  • Be as accurate as possible when estimating the cost of repairs.
  • Use a variety of sources to gather data on comparable properties.
  • Consider the current market conditions when making your calculations.
  • Talk to a real estate appraiser to get their professional opinion on ARV.

By following these tips, you can increase your chances of c

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