Investors are always looking to buy property as low as possible and sell as high as possible to maximize their profit. To this end, we have to find ways to maximize the value and potentially increase the ARV (After Repair Value) of our projects. Tweet This We often hear the popular phrase in the industry that kitchens and bathrooms sell houses, but do they help you to maximize your ARV? Well yes, a newly renovated kitchen with granite, new cabinets and stainless steal appliances can boost your ARV by $3,000 or more. (Using our Baltimore market as an example.) If you add a bathroom that can increase the ARV by another $3,000 or more, depending on whether you add a half bath or a full bath. Adding additional bedrooms can add as much as $10,000 to your ARV. If you add a master suite this could increase your ARV by $15,000 or more. Finishing the basement can be a big ARV booster. Completing an unfinished basement adds livable square footage and could add up to $20,000 or more depending on the size of the house and configuration of the basement. Just remember that adding a bedroom to the basement, unless it’s considered a legal bedroom, (proper square footage, it’s own closet, and proper egress from the house in case of a fire) the appraiser won’t count it as a bedroom when appraising the house. The ceiling height of the basement must also be high enough to make the space livable to actually add value. Check with a local appraiser to see what height is appropriate for your area.
We have focused on several things on the interior of the house that will increase the ARV, but what about the exterior of the house? Buyers will pay more if they have off street parking. So a driveway or parking pad can get you as much as $10,000 more in some areas. Adding a garage will boost your numbers even more. Adding a deck on the back of your house would be another item to get more value out of your project. Decks can add as much as $5,000 to your ARV. So, don’t forget about these outdoor spaces.
Probably the biggest ARV booster is adding an addition to the house, which would increase the overall square footage. The value of an addition would depend on the size and configuration. It would depend on if you were adding additional bedrooms or bathrooms.
Unfortunately cosmetic items like windows, doors, carpet and paint won’t increase your ARV; however, they are important to the presentation of the house and will influence buyers to pick your house over another property.
Numbers may vary in different parts of the country so it’s important to consult with a licensed realtor or appraiser to confirm the appropriate numbers for your specific area. So, when planning your next rehab explore what options you have to increase your ARV.
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