Buying with ARV the highest per sqft to comps

[Leland S.]

Hi - I'm looking at buying a house for the purpose of rental/investment or flip in the south Nashville area. 

The asking price is is $136 per sqft, but two comps on the same street that sold in May and June this year for $129 and $124/sqft. They were both about 400 sqft bigger and had attached two car garages. This house has no garage and in fact the property line is cutoff by this county "easement" for a drainage waterway. It's probably possible to install a 1 car garage that would just barely fit within the "TVA easement" line that cuts across a large corner of the property. On the plus side, the drainage area is a nicely mowed grass that is like having free extra yard space. I'm not sure the interior of the other homes, but this one is in pretty nice condition. It needs a kitchen remodel and bathroom sinks updated, possibly some changing to the kitchen wall between the living room, but otherwise is in good shape. 

How would the experts approach analysis on a property where the after repair value must be the highest $/sqft on the street? It does command a decent rent based on the previous renter that would cash flow about $200/mo (if they accepted my 20k lower offer). The realtor is pushing me to offer closer to their offer explaining that the area is in such high demand it will keep going up. 

Thanks for your insights. 

[Devan Mcclish]

I wouldn't buy it for $100 a sq ft.... Maybe I am just cheap ;) But I like to hit homeruns, not bunt singles. Every time I look at a house, if the cheapest house in the neighborhood sold for $124 a ft like you said, I want it for $90 a ft. Create the best scenario so that even if doomsday comes, you can still make money on the deal