Running Comps for Flips

[Michael Sanders]

I'm new to a lot of the real estate world and I'm trying to run numbers on potential flips but I'm running into trouble running comps. A friend of mine is a realtor for a real estate wholesale company and has been sending me new properties they get contracts on in the greater Houston area. I've been running numbers on all of the costs including rehab but I'm not getting very far with pulling comps to verify potential ARV. I'm using Redfin and don't have agent access to the MLS, but I'm not wanting to dive in completely with my friend's company without verifying the comps they provide. Just looking for some tips so that I can be sure to do my due diligence and protect myself. I know hard money lenders aren't going to fund a flip if I can't show it being profitable so I want to be very thorough.

[Joe Villeneuve]

Start by grouping the comps you do get using two qualifiers:

1 - Within no more than 2 square miles of eachother.

2 - The square footage must be within 10% larger and/or smaller than any property you are analyzing to buy

Don't group multiple properties of different sizes and take the average square footage.  It doesn't work like that, although you see Agents do that to make their properties look better.  The good ones don't.

Don't use properties that are too far away...they have no impact, but this is also something that you see too often.