ARV, LTC, and Exit Strategy: The Numbers That Make or Break Fix & Flip Deals
ARV, LTC, and Exit Strategy: The 3 Numbers That Decide Whether a Fix & Flip (or Fix & Hold) Works
One of the most common mistakes I see investors make isn’t the rehab budget or the contractor.
It’s misunderstanding ARV, LTC, and the exit — and how tightly they’re connected.
ARV (After Repair Value)
ARV isn't what you hope the property is worth.
It’s what today’s appraiser and lender can support with real comps.
If your ARV is off:
- Your loan size shrinks
- Your cash-to-close grows
- Your refinance may not work at all
LTC (Loan-to-Cost)
Many investors hear “90% financing” and assume:
That’s rarely true.
LTC is based on:
- Purchase price
- Rehab budget
- The lender's ARV (not yours)
If ARV comes in light, LTC caps kick in fast — and that's where deals blow up before or after closing.
Exit Strategy Is Not Optional
Flip or hold, the exit must be underwritten before you buy.
For a fix & flip:
- Can the ARV support resale comps after time, price reductions, and market shifts?
For a fix & hold:
- Can the property qualify for a DSCR refinance at today's rates?
- Does stabilized rent actually cover the debt?
- How much cash stays in the deal after refi?
A property can be:
- A great flip
- A terrible DSCR exit
And that’s where investors get stuck with too much cash in the deal.
The Right Order of Operations
Experienced investors don’t ask:
They ask:
Then they reverse-engineer:
- ARV
- Loan structure
- Purchase price
- Rehab scope
Same house.
Same renovation.
Very different outcome — because the exit was designed, not guessed.
Curious how others here are underwriting ARV and exits in today's market — especially for fix-and-hold deals.