How many different ways to determine the ARV

Question

Hello I was just wondering how many different ways to determine the ARV on a property.  Some say 60% others say 65% and I even heard 50%.  Which is the correct percentage to use?

Thanks!

Shurrone Jordan

Linval T. · Answer

Account Closed

That's a good question and I clearly understand the confusion when numbers are thrown out at random.

However, below is a blog that logically answers your question.

https://www.biggerpockets.com/renewsblog/2014/02/1...

Shurrone Jordan · Answer

Thank you guys so much 70% ARV is a great rule and it makes a lot of since now.  Thanks for the link Linval T.  Its not rocket science huh.  Thanks all.

Sincerely,

Shurrone Jordan

David Beckley · Answer

I agree with J Scott......the % of ARV is what an investor may be willing to pay for a property. 70% of ARV is the general consensus to buy a property, not including rehab costs, quiet cost, and expected profit. After subtracting all of that, getting a property at 50-55% of ARV is a good target. If you can get lower than that, you are really doing well. As far as how to figure out ARV, I use 4-5 numbers and average them out. Sales comps, tax assessment, average sq/ft x property sq/ft, and zestimate. This gives me a pretty conservative number. Hope this helps

John Thedford · Answer

One word of caution:  don't believe anybody's figures. Verify.  As an example there is one currently posted on BP with an outrageously dishonest number.  Their  ARV is 20% over asking price  and it is total baloney.

J Scott · Answer

I think you have your terms confused.  ARV means "After Repair Value," and it is the anticipated value of the property after it is rehabbed.  That has nothing to do with any percentages.

To determine ARV, you need to an analysis of comparable properties in the area, which is often done as a CMA (Comparative Market Analysis), a BPO (Broker Price Opinion) or an Appraisal.  You can do this yourself if you have access to the MLS (and know how), or you can find a real estate agent or appraiser to help you.