i have a question. I’m looking at a deal that was presented to me and this is what the agent said they were asking for the home. “The seller is asking 80% ARV and would consider a decent offer.” Dose that mean they want the price to be at leat 80% of what the property is worth after rehabbed?
Yes, ARV means “after repair value”. However, you always want to subject your fix-up costs from the 80% ARV to determine your purchase price.
ok could you give me a example of how i might do that?
here’s how I’d look at it:
If the house is worth 100k ARV , you’re looking at 80K invested right off the top. Take into account any costs in fixing it, carrying costs if you’re looking at eventually flipping it or other things you might bump into. Let’s say that amount works out to 10k. Subtract that from your initial 80k and now you’re looking at getting that property for 70k.
Reading how you worded what the seller is asking it seems as if that 80% number is what they’re hoping to get. From my perspective I’d go in at the 60% range, depending on how much you’re going to have to spend to fix it. If you start at 60%, they start at 80% and you’ll probably end up somewhere in the middle. Watch out for your repair/holding costs as that’s your profit that’s getting eaten up.
naperbill