I’m sure you’ve heard the term “ARV” pop up from time to time, but what exactly does it mean? “ARV” stands for “As Repaired Value”. Basically, ARV is not the value of a home today, but it is the value of a property after it has been fixed up and repaired.
If you find a home listed for $100,000 that needs a lot of work, but you see that identical homes in the neighborhood that need no work are selling for $175,000, then your ARV is $175,000 for the home. It doesn’t matter how much it takes to fix up the place, it’s just what you could sell if for should you fix it up.
Determining the ARV on a flip or a non-performing note is the first step to determine if it is a deal that you would like to do or not. If your ARV is higher than your purchase price plus closing costs plus repair costs, then you might have a deal worth doing.