Glossary
As-is value
As-is value is what a property is worth today in its current condition, before any repairs. It is the starting point that the rehab is supposed to lift up to the ARV.
Investors focus on ARV, but the as-is value matters too. It tells you whether you are buying at a discount, and it is the number an appraiser uses if the work is not finished.
Where as-is value shows up
- Your offer. Paying under as-is value is instant equity. Paying over it means the rehab has to do all the work.
- Hard money. Some lenders size the purchase part of the loan off the as-is value, not the price.
- Refinancing early. If you refi before the rehab is done, the appraisal comes back as-is. Run The Deal flags a refi month that lands before rehab completion for exactly this reason.
- Value added. ARV minus as-is value is what the rehab creates. Compare it to the rehab cost.
- Purchase price
- $150,000
- As-is value
- $170,000
- Rehab budget
- $50,000
- ARV
- $260,000
- Value added by rehab ($260,000 - $170,000)
- $90,000
- Refi at 75% of as-is value
- $127,500
- Refi at 75% of ARV
- $195,000
Difference from refinancing too early$67,500
75% LTV is illustrative. Refi terms vary by lender.
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