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Comparable Properties (Comps)

Understanding ARV

ARV (After Repair Value) is the estimated market value of a property after all repairs and renovations are completed. It's crucial for fix-and-flip and wholesale deals.

ARV Formula

ARV = Avg Price/Sq Ft × Subject Sq Ft

Why ARV Matters

  • Maximum Purchase Price: Your buying power is tied to ARV
  • Profit Potential: ARV minus costs equals your profit
  • Financing: Lenders use ARV for loan amounts

Frequently Asked Questions

What is ARV?

ARV stands for After Repair Value - the estimated market value of a property after all repairs and renovations are completed. ARV is crucial for fix-and-flip and wholesale deals as it determines your maximum purchase price and profit potential.

How do you calculate ARV?

Calculate the average price per square foot from comparable properties, then multiply by your subject property's square footage. ARV = Average Price/Sq Ft × Subject Sq Ft. Use at least 3-5 comparable properties for accuracy.

What makes a good comparable property?

Good comps are sold within the last 6-12 months, located in the same neighborhood, similar in size (within 20%), same property type, similar number of bedrooms/bathrooms, and in similar condition. Avoid comps from different areas or significantly different property types.

Why is ARV important?

ARV determines your maximum purchase price (using the 70% rule: Max Purchase = ARV × 0.70 - Rehab Costs), shows your profit potential, helps secure financing, and guides your exit strategy (flip vs hold).

How accurate is ARV?

ARV accuracy depends on the quality of your comparables. Using 3-5 recent, similar comps from the same neighborhood typically provides accuracy within 5-10% of actual sale price. Always be conservative and add a buffer for unexpected costs.