Six tips to follow while determining the ARV( After Repair Values) of a Flip
1.Consider Sales Prices Only: Only look at houses sold. Exclude ones just for sale
2.More Recent, the Better: Preferably look for houses that have sold within the last six months.
3.Do not just rely on Comps. Not finding recent sales of similar properties in the area can be a red flag, there may not be demand or prices have inflated already.
4.Square Footage: At times, we cannot find property similar to the subject property, best alternative is to find a similar property with similar amenities, square footage, year build and distance. Arrive at the average square footage of similar property, and estimate the likely value of the subject property. In simple words, number of square feet multiplied by average square feet value of the similar property.
5.Number of Bedrooms and Bathrooms: Adjust the price to accommodate difference in the number of bathrooms and bedrooms.
6.Lot Size: Land is valuable. Pay attention to lot sizes and other factors likes lake views, size of garden, number of garages etc.
A good rehabber shall be able estimate the ARVs accurately and cherry pick deals.
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