How after repair value is determined on a financed flip

After repair value is what a property should be worth once the renovation is finished. On a deal you pay for with cash, it is your own estimate and it only has to convince you. On a financed flip there is a second ARV: the one in the appraisal, and that is the number the loan is sized against.

So the useful question is not how to calculate ARV in the abstract. It is how after repair value is determined by the person whose opinion the lender relies on, and how to make your own estimate land near it.

The commonest gap is the comparables. Investors tend to pick the best recent sale in the area, the one with the high-end kitchen on the quiet street. The appraiser picks the sales that most resemble your finished house, and if your finish level or your street is different, so is the answer.

Over-improving is the second. A finish level well above what the neighbourhood supports costs real money and often appraises at the neighbourhood’s ceiling, not above it.

The third is time. Comparables are by definition past sales. In a market that is softening, recent sales can still overstate what a finished house will sell for months from now, and the appraiser is looking at the same past sales you are.

A line-item scope of work, plans or specifications where they exist, and the comparable sales you relied on with a sentence on why each one fits. An appraiser is not bound by your comps, but a clear scope removes guesswork, and guesswork is read conservatively.

What happens after the purchase, from draws to the maturity date, is in the guide to what a bridge lender underwrites, and the hold-and-refinance version of the same deal is in the guide to how BRRRR financing works. Rehab lending on an investment property is business purpose, available in any state. Send the address, the purchase price, the scope and your comps for a first read. This is not a commitment to lend.