Investor · Jacksonville, FL · Member since 2010 · 71 posts · 14 votes
Hi,
I'm confused & stuck. When using the Rental & BRRRR tools it asks for an ARV. To me an ARV is after you have fixed it all up how much is it worth compared to other properties being similar. One way to obtain the ARV is Comps from a Realtor. However, is that not the fixed up value? When renting you normally don't fix up the same way as if you were selling it. Older kitchen, baths, appliances, etc., etc. So how do I find the ARV for a property that is good enough for a rental, but not for a sale? As the ARV is very important when using the tools, I want the ARV to be as accurate as possible. I might have to put in another 15-20k when I actually want to sell it and get that ARV. Any help would be greatly appreciated. I'm missing something simple here. Thank you.
Developer · Hobart, IN · Member since 2014 · 773 posts · 225 votes
9y
So ARV stans for After Repair Value so that can be after you put 5K into the house or after you put 55K into the house. You are the only one that knows how much and what exactly you are doing to the property. So you have to explain that to whoever is running comps for you. Tell them this is what i'm looking to do to the property how much ill its be worth when the repair are done.
For BRRRR you need to know what the house is going to appraise for as this is what you base your LTV on and everything. So if you are only down got much to the unit then those are the comps you look for. You can't use the comps that are flips or high end unless that is what you put into the property.
Hope this helps not sure if that's what you are looking for really. Let me know if you have other questions or if I can help.
You need to find comps just as would for any time you want to sell even if it's in the future. You are correct the ARV is after rehab. Even with rentals it doesn't hurt to make some improvements. Look at comparable properties that are in similar condition. I believe in buying properties at a discount and rehabbing them for rentals.
I rehab my rentals at a higher level so I can refi them and pull my money back out. Its a little bit of a different strategy. One of the advantages I can attract higher quality tenants and higher rents.
Developer · Hobart, IN · Member since 2014 · 773 posts · 225 votes
9y
So ARV stans for After Repair Value so that can be after you put 5K into the house or after you put 55K into the house. You are the only one that knows how much and what exactly you are doing to the property. So you have to explain that to whoever is running comps for you. Tell them this is what i'm looking to do to the property how much ill its be worth when the repair are done.
For BRRRR you need to know what the house is going to appraise for as this is what you base your LTV on and everything. So if you are only down got much to the unit then those are the comps you look for. You can't use the comps that are flips or high end unless that is what you put into the property.
Hope this helps not sure if that's what you are looking for really. Let me know if you have other questions or if I can help.
Real Estate Investor · Los Angeles, CA · Member since 2013 · 2k+ posts · 694 votes
9y
@Howard Greisman if you want to use the Refinance part of the strategy, and you want to get the maximum out then you're going to have to show how it compares to similarly fixed up places, be it rental quality or better. In general though you will want to compare it with similar rental properties to get the appropriate level of finishes that your rental should have.