What ARV do use when buying rental property?

Question

Hello. What ARV do u try to purchase? Its it too high of a goal for me to attempt to purchase homes at 50%ARV with hard money....I'm anticipating to renovate and get the appraisal up so that way i can refi to conventional financing to pay off money for repairs and hard money. I would like to refi with 30%equity.

What percentages do you follow when purchasing single family homes for rental...or multi families like quads and duplexes?

Dave Spooner · Answer

@George Rodriguez If I'm understanding your question correctly, you want to purchase a property, rehab it, and you want it's resultant appraised value to be so much so that you can take an 80% LTV mortgage and have extra cash. Is this correct?

George Rodriguez · Answer

@Dave Spooner yes. That is correct. I want to buy the house so that when its all set and done i have 70%LTV. Including the repairs. So if the arv is 200k. I would like to buy it at 100k. And if it needs 40k in repairs than im only 140k in the hole and with 30%equity...and 70%ltv under conventional financing....

Is this the norm or am i selling myself a dream and shooting too high?

Chris Seveney · Answer

@George Rodriguez

Not understanding your question as ARV is after repair value and what you buy it for depends on how much the repairs are. If you buy a $200k house at 50% ARV (100k) and it needs 100k in repairs then that’s a horrible deal.

If you are saying you want to buy a house AND repair it and have your money into the deal at 50% ARV you are going to be spending a very long time trying to find a property that fits that criteria

Going off a percentage is also a horrible idea as 75% of 100k is very different than 75% of 500k.

Figure out how much effort, how much risk and how much you want to make and work the math backwards