Understanding ARV: The Key to Profitable Wholesale Deals
Learn how to accurately calculate After Repair Value (ARV) and why it's the most important number in wholesale real estate investing.
What is ARV?
ARV stands for After Repair Value - the estimated value of a property after all renovations are complete. This is arguably the most important number in wholesale real estate.
Why ARV Matters
The ARV determines:
How to Calculate ARV
Step 1: Find Comparable Sales
Look for properties that have sold within the last 6 months that are:
Step 2: Adjust for Differences
Make adjustments for:
Step 3: Calculate Your Value
Average 3-5 comparable sales to determine your ARV.
The 70% Rule
Most investors use the 70% rule: Maximum Offer = (ARV × 0.70) - Repair Costs
This ensures enough profit margin for both the wholesaler and end buyer.
Common Mistakes to Avoid
1. Using comps that are too old
2. Comparing different property types
3. Ignoring market conditions
4. Overestimating renovation quality
Tools for ARV Analysis
Conclusion
Mastering ARV calculation is essential for wholesale success. Take time to practice with multiple properties before making offers.