Understanding After Repair Value (ARV) When Investing in Real Estate

Estimated read time 3 min read

As a real estate investor, you can’t ignore the importance of after repair value (ARV). You’ll need capital to purchase homes or other properties so that you can flip them. While there are plenty of lenders out there, they may look at your ARV. Lenders often use ARV to calculate loan amounts for real estate investors.

Understanding After Repair Value (ARV) When Investing in Real Estate

What Is ARV?

ARV is exactly what it sounds like: the fair-market value of a home or property after all repairs have been made to it. It’s a term used by real estate investors.

If you purchase a home or property with the intention of flipping it for a profit, you’ll probably have to make repairs to it. The repairs, of course, should increase its value. ARV is the value of the home or property after you’ve purchased and performed all of the necessary repairs.

How ARV Affects Real Estate Financing

ARV can affect your ability to obtain financing when flipping homes and properties. Real estate financing typically consists of loans. There are special types of loans, in fact, that are designed specifically for real estate investors, such as hard money loans and bridge loans.

If you’re looking to obtain a hard money loan or a bridge loan, you should consider the ARV. The ARV is the value of the home or property with which you intend to use the loan after all repairs have been made to it. Lenders may use the ARV to calculate the amount of the loan. The higher the ARV, the more money they may offer to lend you.

ARV vs LTV: What’s the Difference?

There’s also loan to value (LTV). While lenders may use both ARV and LTV to calculate loan amounts for real estate investors, they aren’t the same.

LTV is based on the purchase price of the home or property. It’s the difference between the purchase price and the amount of the loan. If a lender offers a 60% LTV on a $100,000 home or property, the loan amount will be $60,000.

ARV is simply the value of the home or property after all repairs have been made to it. ARV is used when flipping homes and properties. To flip a home or property, you’ll need to make repairs to it. ARV is the value of the home or property after you’ve made these repairs to it.

This article was brought to you by Intrepid Private Capital Group, a Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our website.

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