Whether you’re flipping houses or investing in real estate for the long haul, there are really no “secrets” to success.
Forget all those guru offers that appear in your inbox that claim to “reveal the insider secrets” to “only a select few” while they “pull back the curtain”…(of course you need to buy the $40,000 course in order to find out what those “secrets” really are).
When it comes to real estate investing and house flipping success, it’s really not as secretive and cloak and dagger as you may think.
Mostly, it’s just about the numbers – and being disciplined and formulaic in your approach to each and every deal.
And perhaps more importantly, it’s about the single most important number in any real estate deal you ever do…
In that “secret” is After Repair Value or “ARV” for short.
ARV: A Bit Like Goal Setting
ARV is the most important number in house flipping, period. This is largely because it determines so many other things in all your calculations. Everything in your entire deal flows from this number.
With ARV, you are reverse engineering your entire deal – in essence, working backwards to where you want to be from where you currently are.
Think of it like goal setting.
Let’s say in the year 2014, you want to make $50,000 investing in real estate. This is a great goal to set for yourself.
To take the next step in your goal, you’ll then need to write down all the steps that you’ll need to take in order to achieve that goal.
When buying houses to flip, ARV is like setting a goal. You are determining the end value of a property before you would ever consider putting an offer. The ARV gives you the basis for creating the offer.
It’s like beginning with the end in mind.