How Do You Approach ARV in a Market That’s Shifting?

Question

Markets aren’t as predictable as they used to be, and I’m seeing comps vary more than usual.

How are you adjusting ARV when things seem less stable?

Are you leaning on tighter comp ranges, longer timelines, or conservative exit assumptions?

Curious how other investors are adapting.

Diego Alvarado · Answer

Hi @Melinda Eilts

Market volatility is not uncommon; in fact, it is the nature of the beast. While many successful investors talk about "trusting their gut," true intuition is simply data processed rapidly. To rely on your instincts, you must first feed them the proper information.

General market knowledge is no longer sufficient. Take the DFW Metroplex, for example. Claiming to know the "DFW market" is too broad to be useful. Even claiming to know the "Dallas market" is vague, given the city’s massive footprint and developmental diversity. To truly gain a competitive edge and step ahead of the masses, you must understand the micro-market: the specific neighborhood, the street, and the block.

This is precisely why seasoned investors recommend partnering with a specialized agent—someone who doesn't just know the city, but lives and breathes the specific pockets where you intend to buy.

Roberto Reyna · Answer

As a hard money lender, we run tight comps. Nothing more than 180 days old. If nothing is available, I would expand the mileage before going back more than 180 days. It's my job to put my borrowers in the best position possible, which often means killing unrealistic dreams. Here in Houston the market has been the toughest it's been in over 10 years. Conservative exits, tighter timelines, and being honest with yourself will keep you in the game. Good luck!

David Atis · Answer

I’m advising my investors in a shifting market to a conservative approach to ARV. Tighten the comps to around a .5 mile radius but definitely no more than 1 mile, use sales within the last 90 days but no more than 180 days, and rely on the lower end of the comp range instead of the top sale. I also advise adding 30-60 extra days to your projected days on market and never assuming your project will achieve the highest comp unless your renovation clearly supports it.

I tell investors to stress test every deal by reducing ARV by about 5 percent, adding 10 percent to the rehab budget, and extending holding time by a month or 2. If the numbers still work under those conditions, the deal is typically strong enough to move forward even in a softer or uncertain market.

How Do You Approach ARV in a Market That’s Shifting?

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