Real Estate Lingo: What is ARV?

Understanding Real Estate Investment: ARV

Thank you for joining us in this investor-friendly series! Last time, we delved into the concept of MAO, which stands for Maximum Allowable Offer. This is the highest amount you can offer for a property to ensure profitability when you sell it. Today, we’ll explore another crucial term in the investor lingo: ARV.

What is ARV?

ARV stands for After-Repair Value. This is the estimated value of a property after all renovations and repairs are completed. Understanding ARV is essential because it helps investors determine the potential resale value of a property, which is crucial for calculating the MAO.

Let's take a practical example. Imagine a property we’ve recently purchased. At first, it didn't look very promising. However, after painting the exterior and doing extensive work inside, it’s starting to shape up nicely. Before we made an offer on this property, we needed to establish our MAO, and to do that, we had to know the ARV.

How to Determine ARV?

To determine the ARV, you need to:

• Consult with an Investor-Friendly Realtor: Professionals like us at Bradley Real Estate Group can help you assess the potential resale value based on comparable properties in the area.

• Evaluate Comparable Sales: Look at recent sales of similar properties in the same neighborhood that have been renovated.

• Consider Market Trends: Stay informed about the current real estate market conditions, as they can impact property values.

With the ARV in hand, you can proceed with the calculations to determine your MAO. This ensures that your investment remains profitable and mitigates the risk of overpaying for a property.

Stay Tuned!

There are several other important numbers and calculations that you need to master to make informed investment decisions. Stay tuned for more insights in our upcoming posts.

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Happy investing!