How do you gather comps for estimating ARV when starting out?

Question

I am brand new to real estate and have spent the past few weeks reading, watching, and listening to everything real-estate (mostly from Bigger Pockets and Brandon Turner's books). I am excited to say the least, and I'm ready to start practicing analyzing some properties in my area. I started analyzing an example property that would require some work (cabinets, paint, fixtures, floors) as I am planning on doing short term rentals, but want to analyze for long term rentals first to insure a good backup plan. However, I had a hard time estimating the rent I would charge and how to get comps to estimate the ARV. I know that accessing the MLS is a good way to gather comps, but I don't have a real estate license, nor do I want to bother a realtor with every property I want to analyze. Any advice on how to estimate this information when first starting out would be greatly appreciated!

Joe Villeneuve · Answer

Zillow. Just DON'T use their Zestimate...it's garbage and totally inaccurate. Keep common size properties as a group (no commingling sizes) and let the common comps of each square footage generate its own map. When you see same comps for same size properties in a tight area, you have what you're looking for...a micro-market.

Now, don't argue with it, or rationalize it. Not all areas form micro-markets. It there is no micro-market formed, don't buy there.

Now, don't argue with it, or rationalize it.  Not all areas form micro-markets.  It there is no micro-market formed, don't buy there.

Danielle Jackson · Answer

I have built relationships with a handful of agents. You most likely aren't their only investment client, so their taking the time to understand good investment opportunities in their markets only empowers them to help more of their client base. Good luck!

Alicia Marks · Answer

I use realtor.com to build most of my comps. I save lists to favorites and use the ones sold to create my comp list. They don't always show the last listed price, but you can usually find it with a little digging. If you want to save even more time, just screen shot the price when it shows pending.

Allan Smith · Answer

In the past 5 years I've bought 70 - 80 houses using redfin and sorting by $ per SF. Sort with highest at the top and those are your renovated properties and thus your ARV base. It's free and all ya need.

Eric Janson · Answer

As an agent, it is exactly what I get paid for.  To help my client make an informed decision on a property.  That is why I said he has to look at some of them.  Get a feel for the market.  I would help out client like this, but I would also encourage them to take a look at some of these properties.  The client has a to get a feel for the market before they can make a confident decision.

Also, sending out comparables on a property does not take that long.

Dustin Corbett · Answer

@Ashton Patterson I'm new to this myself, but have always looked real estate values and it helped once I decided to take the next step with the understanding of what the market is local to me.

As far as the realtor, I understand where you're coming from. I am in a commission based position as my full time job and it transfers over in my head to not want to waste someone's time. However we found a realtor that understands what we want to do. He invests in real estate himself so he totally understands what we're doing. That would probably be a great fit if you found someone who does it themselves.

We found a deal that we are trying to put together now that we found ourselves without the realtor. It is for sale by owner. And the seller WILL NOT pay an agent commission. So unfortunately I had to tell our agent I cannot use him in this instance and that I truly was sorry because I want him to get paid, but if I paid it, the deal would be considerably worse. He understood the situation and appreciated that I at least let him know and was up front. I explained that we still want to use him in the future!!

No love loss. It's business

David M. · Answer

@Eric Janson

I wouldn’t say “it’s what they get paid for…”. Agents do not get paid for closing transactions, not running comps on theoretical/hypothetical fixes.  It may be part of the job assuming it’s a loyal client who use the agent’s services to close a deal..

Eric Janson · Answer

I know you are worried about wasting a Realtor's time, but this is what they get paid for.  Find a good investor savvy agent and go look at some properties.  This is the best way.  When you see something you like, have the agent help you with the numbers (ARV and rental comps).  Then plug into your formula and see if it is a good deal or not.  If it isn't, then go onto the next one.

As you do this, you will learn values for both resale and rents.

Nicholas L. · Answer

@Ashton Patterson find a realtor.  Ask for actual comps one time.  Then use those comps as you analyze multiple properties.  Then work with this realtor if you move forward.

Christopher Cole · Answer

Zillow was mentioned. There are others, but Redfin, Realtor.com, and Trulia are good resources too.

You also mentioned you were having a hard time figuring out rents. BiggerPockets has a tool for that, but Rentometer is a very popular tool that gets used. You can also check Craigslist and Facebook marketplace to see what rents are advertised in your area.

How do you gather comps for estimating ARV when starting out?

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