What is ARV or After Repair Value in real estate investing?

In real estate investing, properties are often purchased in less than great condition, with the plan to make repairs or remodel them and resell or flip them at a profit. When an investor looks at the viability of a project, they must be able to estimate the value of the property after all repairs are completed, or the After Repair Value. This requires some ability to gather repair estimates with accuracy an insight. Real estate investing often involves flipping a property that is purchased in poor condition and then repaired and/or remodeled to bring it to sale at a profitable price. To this successfully, it helps to understand basic renovation pricing. Home repair estimating is a valuable skill for the real estate investor. You can bring in experts, and it's often a good idea. But continually calling on tradespeople to accompany you to properties that you later decide are not for you can result in their resistance to such help in the future. Having the knowledge and tools to at least determine the basic feasibility of an investment before calling in skilled help can be much more efficient. Estimate high! Use repair estimation resources that base their time and material costs on quality licensed contractors that guarantee their work. If you're using a national guide, check it against local pricing. If it's a bit high, that's a good thing to protect you from errors or things you might overlook. If it's a bit low for your area, then adjust accordingly. Sweat equity is good, but estimate without it: Use the estimation tools even if you plan on doing some or all of the work yourself. Many a smart investor has taken a beating when circumstances stopped them from doing work on their house for a flip. If you see a profitable investment with estimates for using contractors, then it's a bonus when you can do some or all of it for yourself. Michael Parker, Corona del Mar Real Estate Broker.
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November 28 2012 - Corona del Mar
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This sounds more like a blog post than a question as you answered your own question.
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December 13 2012
 
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