How To Determine the After Repair Value of a Property Using Backflip

The Magic Number

As a value-add flipper, the key number you need to know is a property’s After Repair Value (ARV). The ARV is the market value of the home once it’s fixed up. Knowing what the place should sell for allows you to determine the maximum bid you can place to still make the profit you need (assuming that you nail your rehab budget).

That information is often time-sensitive. And getting it right is up to you.

Since the market value of a house is derived from the price of comparable properties, assessing the ARV isn’t rocket science, but it is a science… with a little bit of art thrown in. Working it out can take time—but it doesn’t have to. To help you, here are 7 Rules, and 1 Easy Button (aka the Backflip Analyzer).

The 7 Rules of Calculating ARVs

Rule 1: Select comps similar in square footage and features (era, style, number of beds/baths).

Rule 2: Use recently sold comps. Old comps and comps that haven’t actually sold are inferior.

Rule 3: Choose comps in the same neighborhood, and know how neighborhoods break down.

Rule 4: Only use comps that are fixed up homes – not distressed properties.

Rule 5: Be unbiased. It’s easy to choose comps that suit what you want the ARV to be, versus choosing the right comps and getting the right number.

Rule 6: Try to have at least three high quality comps to calculate your After Repair Value.

Rule 7: Don’t speculate based on the possibility of home appreciation.

The Time Problem

Here’s the thing: any serious real estate investor might evaluate a dozen or more properties per day. Comping the old way—poring through Redfin or Zillow, matching attributes, building spreadsheets—is incredibly time-consuming. It can take 15 minutes to get an ARV. Less patient flippers fall back on guesswork and hunches, which isn’t how you want to play with money.

The Easy Button

The Backflip Analyzer is one way to get an ARV instantly – at least to identify the properties for further analysis. It’s an Easy button for comps and ARV! The Backflip app draws from MLS and other data sources, same as a realtor would. So, even if you prefer your own process, just finding comps can significantly cut down the time you spend analyzing.

And since it’s free, while lesser products charge, there’s every reason to try it.

How to Use the Backflip Analyzer

1. Download the app and sign up.

Here’s your dashboard. Each widget serve up cool information about your app use and leads that can help you make better investing decisions. Tap Analyze…

Analyze

Type the address of your potential deal:

It takes a few seconds for the app to pull comps from MLS and other data sources to create its analysis. Then you see:

At the top you have the property information, including a good guess at the As-Is Value—you can input a different number if you know it, or update bed/bath/size.

Next is the estimated ARV, based on the price/square foot of the 3 properties that Backflip’s algorithm selected. And Backflip shows you immediately if it thinks this’ll be a profitable investment. (You can jump over to the Calculate tab to investigate further, but right now, let’s explore the comps.)

Review Comps

Did Backflip select the right or enough comps? A local expert like yourself might want to adjust based on your knowledge and your personal application of the 7 rules above. Select or deselect comps using this plus/minus icon. You’ll notice that each change changes the ARV.

All comps show price, beds and baths, square footage, year built, last sold, days on market, distance from subject property, and price by square foot. 

You can Sort comps based on any of these criteria. So if, for example, you want to exclude anything farther than a mile, or sold over 6 months ago, or a price outlier, it’s easy to do.

You can tap into any home to look at photographs. This allows you to confirm it’s a renovated sale, as well as see what kind of finishes are expected for the price point in that neighborhood.

You can view in map form, because proximity isn’t the same as neighborhood. If you know the area, you’ll know the relevant locations.

Once you’ve done your own due diligence. Go back and compare your comp selections and ARV with what Backflip showed. Was it pretty close? Ideally, over time you’ll build trust with Backflip’s initial selections—the algorithm is constantly being improved.

Calculate Profit

Once you have the ARV, you’ll want to see what kind of profit the property can turn. Backflip will give you an indication with a handy dial visual, but hop over to the Calculate tab to get into specifics.

In Calculate, first select if this is a Fix and Flip or a Rehab and Rent. In this case, it’s a Fix and Flip. The ARV has been pulled over from the Comps tab. Estimated Purchase Price has been pulled in from the As-Is-Value. Rehab is estimated at $30/sq ft. If you have a better idea of Rehab and Purchase Price, update these numbers.

Your Cost Basis is your Purchase price + Rehab costs. That is, the cost of the completed property. Delete that from the ARV (what you can sell it for) and you get your Gross Profit.

Your estimated Cash to Close is the money you’ll need to have available to do this deal. But getting a real number entails a friendly conversation with a Loan Expert. Same with all these loan estimated costs outlined below. So, click Get a Loan to put in a no-strings application and make your plan watertight. Good luck!

Postscript: Comp Alerts

It’s one thing to check your comps before you buy a property. But it’s incredibly valuable to keep tabs during the renovation. Real time comps and price corrections mid way through a flip can help make critical decisions on the fly. Enable alerts by tapping the bell icon in the property header and you will get an email like this when new data comes in.