What is ARV and how is it calculated?
ARV stands for After Repaired Value. The ARV of a house reflects the value of the property after it has been rehabbed, not in its current condition. To calculate the ARV of a house, an appraiser will go and look at the property to determine its current value, and then the value after it is repaired, based on a repair list submitted by Rehab Financial.
The appraiser will look at the repairs on the list, like adding square footage, adding a bathroom, or if walls will be moved to significantly change or improve the layout of the house. He'll then find properties in the neighborhood that are comparable to the property after the planned repairs and improvements are completed. Based on those comparable properties and the differences or similarities to the property in question, he will then determine the after repaired value.
Once Rehab Financial receives the ARV from the appraiser, we calculate 65% of that number and that is the amount we will lend you towards your purchase and rehab costs.
For example: If the ARV determine by the appraiser is $250,000, Rehab Financial will lend you 65% of that, or $162,500.