Blog Stories The Art of the ARV

The Art of the ARV

By Kim Parmon, August 9, 2019

You’re looking at buying a house to flip.  You find one that looks like a great deal.  How can you be sure?  Checking ARV is a key step.  After Repair Value, or ARV, is a phrase that flippers throw around a lot.  So what does it really mean?

Put in the simplest possible terms: ARV is someone’s best guess at what a house will be worth when it’s pretty again.  “Pretty” is a pretty general term here.  Maybe it doesn’t need to be beautified as much as it needs to be made more functional.  Maybe there needs to be a bathroom added, or the tiny kitchen needs to be expanded.  It could be that the head height on the staircase is the big issue here preventing the house from being worth it’s maximum value.  Whatever it is, step one in investing is to formulate your plan to fix the property you’re looking at.

Once you have your plan in place it’s time to determine your ARV.  Maybe you’re taking a dated two bed, one bath bungalow and expanding into the unfinished attic space.  The attic will become a beautiful master suite.  So when you look at comparable sales in the neighborhood you aren’t looking at two bed, one bath homes.  You’re looking at beautifully updated three bed, two bath homes.  What did those sell for?  That’s your ARV.

I will say, there’s a bit of an art to this type of comping.  It’s not nearly as straightforward as comparing a finished home to the surrounding sales in the current market.  What happens if the market changes?  What happens if the repairs done don’t match the comps?  An ARV is really an educated guess about the possible value of a house.

There are a lot of intangibles to this!  Check to make sure the streets are similar.  Are the trees on your street as pretty?  Is the view as good?  Can a dog run around in the backyard or is it all hillside?  Can you have a great dinner party in the dining room or does it only fit a four person table?  Is the master closet going to fit all of those hats?  Put yourself in the shoes of your buyer.  Will they be as happy with your product as they would be with that comparable sale?  If the answer is no you’ll want to reduce your ARV to compensate.

One of the biggest mistakes I see flippers make is assuming an ARV that’s too high.  It’s great to have a positive outlook but protect yourself by investing wisely and making sure your ARV is right on the money!

Happy flipping!

Kim Parmon

Principal Broker

Kim is the first person who will tell you she never expected to be a Realtor. She's had many creative jobs in the past and spent years as a high-volume bartender-turned-bar owner, which she feels gave her an essential skill that translates beautifully into her career in real estate: the ability to juggle 1,000 things at the same time while keeping everyone calm! She became obsessed with buying a house after the market crashed in 2009, finally buying her very first teeny-tiny dilapidated bungalow as a short sale in 2011. She and her husband, Matt, spent a few years fixing it up, then sold it for a profit and bought another project. And then they did it again. And the rest is history! Kim's talent for finding diamonds in the rough has made her into one of Portland's most sought-after investment Realtors. She loves seeing the missed potential in properties and has all kinds of tricks up her sleeve to find great investments but this talent is equally useful when it comes to traditional buyers and sellers. When you buy a home with Kim's assistance you can be sure that she is looking at all angles of the purchase to make sure it aligns with your financial goals as well as your lifestyle and she will stop at nothing to make sure you are taken care of! Some of her clients think she's gotten their offers accepted through sheer force of will! When you list a house with her she will go above and beyond to present your house in the best possible light to make sure you maximize your return on investment. Above all else, Kim prides herself on her integrity and believes that everyone deserves a caring Realtor partner who truly listens and tries to do what's right for her clients, even when no one is looking. She is thrilled to call this beautiful city home and can't wait to help you make your dreams come true through real estate.
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Kim Parmon

Principal Broker

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