Which Talent is Better to Hone?

[Kevin Keene]

Hello, everyone!

I have been reading a lot on comps lately.  (Thanks to Steve Babiak's post "Finding Comps - FAQ") but I have come up with a question.  Which talent would you rather have: estimating comps or estimating repair costs?

Let's start with what I know. I know all talents associated with flipping will come with experience (which I have none). I know that comps can be reasonably determined from MLS related website information, recently sold properties with comparable statistics, and assistance from an agent or broker. I know that repair value (barring the inevitable unknowns) can be influenced by condition of the home and property, area similarities (meaning, if your comps have granite counters, then your flip needs to have granite counters), and budget.

But, what do I really need to know? For comps, the MLS website seems to have the information I need even without being an agent and having the "full" access. Zillow has been a great help, too. Redfin, not so much. Maybe I haven't figured out the magic touch to make their search function work. In the end, if you have a good broker friend, you can get good comp data from them. For repair value, a good contracting team will be there to tell you accurate costs, and you can reasonably infer your budget based on purchase price and area market value. So, in the case of comps and repairs, I would say "who" you know is better than "what" you know. However, repairs will directly affect my bottom line. I assume there is a direct correlation between length of repairs and cost of repairs. Furthermore, the longer repairs take, the more expensive your holding costs.

Therefore, my conclusion is that I would rather be good at estimating repair costs than estimating comps and ARV. I would rather be able to see the pool motor that needs fixing or the foundation crack or the black mold in the ceiling before I consider buying the property. Ugh, but the other side of my brain says I need to estimate ARV before I buy to see if there is any profit to be made... GAH! What would you say?

-Kevin