The Hidden Risk in Aggressive ARV Assumptions

[Seph Hancock]

One of the biggest risks I see in fix-and-flip projects isn’t the rehab budget—it’s overly aggressive ARV assumptions. When markets are appreciating rapidly, it’s easy to project a higher resale value and make the numbers work on paper. The problem is that if the final sale price comes in lower than expected, the entire deal can change. A few things that can impact ARV: • Increased inventory creating more competition • Buyer demand slowing down • Price reductions from comparable properties • Changes in local market conditions during the rehab period • Using outdated comps from stronger market conditions I’ve found that conservative underwriting often creates a stronger margin of safety. If a deal still works with realistic assumptions, it can help protect against unexpected market shifts. For experienced flippers: How much cushion do you typically build into your ARV estimates, and what methods do you use to avoid overestimating resale value? Looking forward to hearing different approaches from the community. #RealEstateInvesting #FixAndFlip #ARV #DealAnalysis #RealEstateEducation #BiggerPockets