Newbie Question #1: How do you estimate the ARV on a home?

[Andres Aguirre]

Hi everyone,

New prospective investor here with TONS of questions and couldn't have found a better place to come searching for some answers :) Rather than post a very long list of questions, I thought it would be best and most beneficial for everyone for me to post one question at a time in the most clear and concise way possible (for which I will try my best!).

I've been immersing myself in books and podcasts over the past several weeks and have been particularly intrigued by the BRRRR strategy. It seems to be a very successful strategy and one that can result in rapid growth. After repair value (ARV) seems to be the biggest factor that can make or break your deal, especially if you are relying on short term financing for the downpayment/rehab and can't afford to leave any money in the deal. So my question is, how can I come up with a good estimate of the ARV when analyzing a deal and have some level of assurance that a bank would be willing to refinance for that amount?

Andres

[Michele B.]

Most people figure out what it costs to purchase plus double what they expect in renovations.  Then they find comparable units in the same neighborhood that have sold with in a short amount of time.  and see if those numbers add up. So simply....100 to buy 100 to fix= 200

comparable units sold for 210-200=10k profit then it looks okay.

If comparable units are 180-200=-20k in profit 

You could go with less in renovations but, if you are new you want to leave a lot of room.....

Good Luck.