As a real estate investor, it is important to know the numbers behind every deal. One area of real estate investing where not understanding your numbers can lead to pretty quick failure is for those looking to fix and flip or fix and hold. Perhaps, the most important number when looking at a potential fix and flip is understanding what the property will sell for after your renovations.
This number is known as After Rehab Value (ARV). Fortunately, for us looking to invest in Philadelphia there is a great free real estate investing tool called the ARVCalculator.com which covers Philadelphia real estate transactions and does exactly what its name implies, provides an ARV Value for a particular property.
The site offers analytics for your real estate investing.
— PhillyRealEstateData (@PhillyInvesting) November 20, 2018
From the photos and the property description, it’s pretty clear this is a full rehab.
Total shell, fixer upper in need of total rebuild. Brick row in an up and coming neighborhood. Comparable properties close by selling for 150K-300K. Motivated owner – priced to sell – sold in as-in condition – bring your offers! Owner has additional listings in this area.
In the case of a full rehab, knowing how much money you are spending on the entire project is what makes or breaks the investment. Interestingly, the ARVCalculator shows this property as having a potentially 4X ARV value.
Even with the potential upside, it is important to always keep your budget and construction costs in ming for any investment. As the old real estate saying goes,
You make money when you buy not when you sell.