What is ARV and how it is useful for house flippers?
ARV the full form is After the repaired value of the property. It is important to know while buying an investment property, especially for property flipping. As house flipping is an investment method used to earn money by flipping the undervalued property by renovating it and then selling it later on a higher price then ARV is required. To the value of the property after repairment or renovation is called as ARV. It can be easily evaluated by the Perth property valuer who knows ins and outs about the property market perfectly.
As a property investor, it is imperative to understand that there is a difference between the two. Value of the property after renovation and before the renovation. But we can’t deny the fact that location of the property, amenities associated with the property, finishing in the renovation work and upgraded values put an effect on after repaired value of the property. This helps a house flipper to understand which repairs and renovation give them good returns on investment.
As the work of the house flipper is to generate good revenue and make profits by flipping the houses. Via After repaired value (ARV) of the property, they will able to know the gap between the purchase of investment property and ARV. Hire valuations wa to get the best valuation services in Perth.
How to evaluate the ARV, After repaired value of the property?
Via Comparables – First, find two-three properties which are similar to your subject property located in the nearby location and sold recently. In short, find comparable properties. Use those comparables to evaluate the value of the property which you want to buy. Make some adjustment say for the quality of renovation and difference it carries to determine the After repair value of the property which you want to flip.
Via Similar sold properties area – To evaluate the ARV you can choose another method. Which includes the sqft area of the property. Here choose the three properties which are located in the same area of the subject property and has been recently sold out. Know the price of those properties and square foot area of the property. Then find the average price of the properties and average square ft area of the properties. And then divide those values to evaluate the avg. Selling price per sq. ft. After this multiply the value with the total sqft area of the property to evaluate the value of it.
Via using the formula – The formula to determine the ARV is quite simple. Purchase price, when added with the value from renovation, gives after repair value of the property. It is assumed that it cost of renovation will increase the value of the property.
This is about ARV and ways to evaluate the after repaired value of the property which investor wants to flip and to earn profits. For more information, you can contact our expert team at Perth Property Valuers Metro.