Rental ARV Calculation
So how we calculate our Rental ARV is by basing this value on what we can purchase an occupied home without it being a detriment to the company, because we are not getting enough from the ARV Valueizer software. There have been many changes to Zillow over the past few months that has caused us to pull less data from them. Since we have determined that the estimates online have been inaccurate, we have based our ARV off the listing, then we change the ARV until the investor price is reasonable, the family price is reasonable, and the rent is as close as possible to the current rent of the property, we also need the ARV to give us a net gain around 10k or above. Below is an example of why we cannot rely on the initial ARV on these homes, the first picture is the Zestimate, which is Zillow.com estimate on how much the property will cost after repair. The second picture is the Realtor.com estimate of how much the home will cost after repair. The information these sites pull do not have any relation to each other at all, so we must try our best to determine the ARV of these properties. Sometimes the ARV that is presented to us by the online sites does work in our favor and we can use that information. If the property is good per the policy. With the Occupied properties, we take the current monthly payment, subtract the taxes and insurance, and that will equal the occupants Principal and Interest. Then you will take the principal interest and multiply that by 90.84. Take that number and multiply by 1.25 and you will get the ARV.
(family current rent – monthly tax – monthly insurance-25) = Principal + Interest
(Principal + Interest x 90.84) x 1.25 = ARV
