How to determine ARV

Question

Hi Everyone,

Looking to get started in real estate and trying to see if anyone knows if there is an exact formula to determine ARV before purchasing a property to ensure you are buying right.

Tanvir Sattar · Answer

@Bryan Newman I found this blog on BP and discussion really helpful for ARV:

https://www.biggerpockets.com/blog/why-arv-is-the-most-important-number-you-need-to-know

Bryan Newman · Answer

Thank you so much for everyone's input!! It is greatly appreciated.

Michael Barnhart · Answer

Absolutely, price per square foot is a great place to start as well.

Timothy Durante · Answer

@Bryan Newman determining the ARV is difficult at first, but you get more comfortable along the way. @Michael Barnhart pretty much covered majority of what to look for in comparing other properties in the neighborhood and what they sold for. Adding to what he mentioned, its always helpful to understand the price/Sq Ft on your comps and calculate that amount with the total square footage of the property your looking to sell.

Happy Investing!

Michael Barnhart · Answer

@Bryan Newman calculating the ARV is just as much an art as it is a science. I would recommend working directly with a real estate agent but also do you own calculations. In addition to the blog post above, I would recommend picking up a copy of the book on flipping houses by J Scott, he goes into some really good detail on things to look for when calculating the ARV. The basics of it are finding properties that have been sold in the same neighborhood or even the same street within the past 3-6 months. The more recent, the better. Then compare your property to these properties. Focus on beds/baths, square footage, porches/decks, fireplaces, basements, age, etc. Using these metrics, you can then adjust their selling price either up or down based on what your house has/doesn't have. After looking around in your area you can get a good feel for how much a bedroom/bathroom costs or how much additional square footage goes for. It can be really complicated, but with practice it gets easier. Best of luck!

How to determine ARV

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