How to Calculate ARV

5 Replies

Hello All, just joined after joining the webinar last week decided to go Pro and all in currently. I am in the Midwest, Kansas City, MO to be exact and currently have 4 doors (luckily i was put in a very advantageous position where my father gave me those 4 after he did this and retired after being laid off years ago (frugal man and lifestyle i know) anyhow, I am looking to grow this portfolio and looking at Single family rentals and possible 2-4 unit multi-family rentals. I am very interested in beginning the BRRRR strategy after listening to some podcast episodes and recognizing the value of real estate. My biggest question would be when looking at a home, when or how do you calculate the ARV, for people investing and doing BRRRR's are you just looking at comps or are you actually speaking to appraisers and telling them what you plan to do and getting a rough estimate? Any help or point in a direction on where to search or look for how to calculate ARV on homes would be greatly appreciative as that seems like the biggest piece i'm missing within the rehab process. I am pretty handy (thanks to the same father mentioned above) and also have access to handy guys for important things like electrical and HVAC. But realizing what rehab can do in terms of property value is just something I have no knowledge of and look forward to fully understanding. Any help or direction would be greatly appreciative! Thanks and happy to join the community!!

Comps. Have an agent set you up with MLS listings in the area(s) you're targeting. I also refer to Zillow's "recently sold" feature (although reliability of it comes into question at times). Also search for comparable rents in the area (craigslist, rent.com, zillow, etc.) What parts of town are you interested in?

Originally posted by @Daniel Toy :

Comps. Have an agent set you up with MLS listings in the area(s) you're targeting. I also refer to Zillow's "recently sold" feature (although reliability of it comes into question at times). Also search for comparable rents in the area (craigslist, rent.com, zillow, etc.) What parts of town are you interested in?

Exactly what Daniel said. The appraiser will be looking at similar properties that have sold within the last 6 months within a few miles radius. Look at #beds/#baths, price per square foot, and try to get a range of where properties are coming in. Of course, you want to make sure you're comparing properties in similar condition. Then use the low end of this range to be conservative. You don't want to be overly optimistic and then an appraiser comes in $30k lower and now you're in leaving an additional $10k in the deal. From speaking with some lenders, you may only be able to get a LTV up to 70% on multi families, so you may need to do some research there as well.

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Comps and recently solds on zillow are great.

Try to stay in the same subdivision.

And in urban core areas, keep in mind that it is sometimes street to street.

Originally posted by @Daniel Toy :

Comps. Have an agent set you up with MLS listings in the area(s) you're targeting. I also refer to Zillow's "recently sold" feature (although reliability of it comes into question at times). Also search for comparable rents in the area (craigslist, rent.com, zillow, etc.) What parts of town are you interested in?

 Thanks for the reply and information. Greatly beneficial. Currently I have been looking in the area of grandview south raytown and south kc. About a 15 mi radius from the new cerner campuses is where I have begun searching, also i have been looking into independence as well as of recently. I have quite a few zip codes on realtor.com sending me homes as they come available but im really interested in the area around cerner right now. I see that you are in KC as well, and you are an investor. Can i connect with you and chat with you out of this thread? thanks.

Originally posted by @Kyle Wells :
Originally posted by @Daniel Toy:

Comps. Have an agent set you up with MLS listings in the area(s) you're targeting. I also refer to Zillow's "recently sold" feature (although reliability of it comes into question at times). Also search for comparable rents in the area (craigslist, rent.com, zillow, etc.) What parts of town are you interested in?

Exactly what Daniel said. The appraiser will be looking at similar properties that have sold within the last 6 months within a few miles radius. Look at #beds/#baths, price per square foot, and try to get a range of where properties are coming in. Of course, you want to make sure you're comparing properties in similar condition. Then use the low end of this range to be conservative. You don't want to be overly optimistic and then an appraiser comes in $30k lower and now you're in leaving an additional $10k in the deal. From speaking with some lenders, you may only be able to get a LTV up to 70% on multi families, so you may need to do some research there as well.

 Thanks for the reply, I think the similar condition is something I have a huge struggle on, without just going up and asking to see peoples homes, but I think this gives me at least a good foundation for basing out information. Thank you again so much.

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