New to BRRRR, How to Calculate ARV and Repair Costs?

[Hariharan Elavarasan]

Hi,

This is my first forum post on the history of the internet, but excited that its here at the start of real estate journey.

I wanted to begin my career using the BRRRR method, because I fortunately have access to a private money lender, and the area I am in has multiple MultiFamilyHomes that could use renovation. I'm learning more and more that I can't just pick a run-down property and have the BRRRR method work out. I'm currently trying the 70% rule using sq ft comps of nearby MFH that aren't as distressed. How do I more accurately calculate my ARV, and most importantly my repairs?

Thanks,

Hari (Future Millionaire)

[Garrett Crosby]

Hi @Hariharan Elavarasan - congrats on your first post known to the internet and mankind. Exciting ;) 

A couple quick pieces of advice in regards to ARV in the current global market (and the specific market you are doing this in).

For comps - I suggest you look no more than 3 months back for sold (and currently active) homes. The reason for this is that interest rates have really shaken up the market. I've also noticed that many specific markets have been hit harder than others.(The LA market vs. my out of state investments in Fayetteville, NC).

It's really important that you get a good gauge at what the market is doing in your specific area as recently as possible so that you don't fall into the "6 month comp trap". You just can't look 6 months back these days.  

Lastly, make sure your team is in place, dates are set and your goals are written out so that once you do get a home under contract, you don't waste time trying to fill holes that could have been filled earlier on in the process. In the same vein as a flip, time is money in this current market with BRRRR's. Having a team set with an agent, a lender, a contractor, a handyman, a property manager ahead of time will make a world of difference.

Wishing you the best of luck! Make that $$$