Keep Your Projected ARV On Target with an Oregon Hard Money Loan
You’re a real estate investor with house flipping know-how. You have done your research and carefully followed real estate market trends. You’ve now found the ideal fix-and-flip investment property and are ready to purchase.
But do you have a clear understanding of the property’s projected After Repair Value (ARV)? Knowing the ARV is critical to a successful rebab project. It’s key to securing financing and helps accurately gauge the potential return on investment.
What is “After Repair Value?”
What, exactly, is After Repair Value? ARV is the estimated value of a property after it has been fully renovated. It’s an essential figure used by investors in fix-and-flip projects to calculate the spread between purchase amount and resale price.
Lenders typically determine maximum loan amounts in part on the ARV. Understanding the time and cost of property improvements helps you communicate clearly with your lender. This leads to more appropriate financing.
Note that it’s important to know the difference between ARV, “as is” (a property’s value in its current condition), and “market value” (the price at which a property will sell).
Here are five After Repair Value tips to get – and keep – your investment rehab project on track:
5 Tips to Determine Your ARV
- Property characteristics: Compare your prospective property to other recently sold homes in the area (“comps”) using online real estate sources like Zillow.com. Look at comparable properties (square footage, number of bedrooms, garage, outdoor space) for a sense of value.
- Know your whereabouts: Using real estate search platforms, find properties that are close to the same public resources and amenities (schools, shopping, transportation) as your potential flip purchase. Calculate the average cost per square foot of homes in the area.
- Compare & analyze: A Comparative Market Analysis can provide valuable information, including photos and characteristics, about property sales in the neighborhood of your intended house flip. Ask your realtor for a CMA copy to help determine your ARV.
- Talk to a broker: For a small fee, you can attain a Broker’s Price Opinion from a realtor not involved in your property transaction. Inform the realtor of property rehab plans; request both an ARV and “as is” summary be included in the BPO.
- Hire an appraiser: For a thorough review and report of your flip property’s “as is” and after repair values, you can invest in an appraiser. Note that you may end up paying for two – yours as well as the lender’s.
Savvy Oregon House Flippers Finance with Hard Money Loans
At Gregory M. Russell we’ve worked with Oregon real estate investors for over 30 years. As an experienced private money lender, we understand the demands of house flipping and what it takes to ensure ROI. Talk to our private lending team about direct hard money loan options. We can help make your house flip project a success. Call us today at 1-888-477-0444 or complete our loan request form. We look forward to partnering with you!