Adjusting comps to arrive at an accurate ARV

[Julio Ruiz-Cadalso]

Hi everyone,

First BP post so I wanted to ask one of my most pressing questions. I live in Houston, TX and will try to close on my first flip in (hopefully) 90 days. I feel uneasy about my ability to get an accurate ARV I can rely on. So my question is, how can I determine how much to adjust my comps for its differences from the "subject" property? I don't know how much one extra bedroom/bathroom is worth, or 300 sq.ft. less, or garage vs carport, etc...

I understand it can vary greatly depending on the area so if there's no way to answer this through the forum, maybe a better question is, where I can find this information (realtor, other investors, websites, etc...)?

[David Ramirez]

Hey Julio,

That's a great question! When calculating the ARV of a property, the first step is to understand the local market and current pricing trends. This includes identifying the ideal property type for the area and getting a general sense of how much similar properties are selling for.

Once you have a feel for the market, you can start to narrow down your search by focusing on factors such as the number of bedrooms and bathrooms, construction type (block or wood frame), year built, pool or no pool, garage or carport, and price per square foot.

A good approach is to look for three comparable properties with the same number of bedrooms and bathrooms within a short radius (0.25 miles) of the subject property. Then, you can compare their features and adjust for any differences to get a more accurate estimate of the property's ARV.

For example, in Florida, block construction is generally considered more valuable than wood frame construction (I see about a 10% difference), and having a garage is typically more desirable than a carport (2 car garage is usually valued at 20k), In-ground pool is valued at around 20k-30k. Additionally, when comparing prices per square foot, it's important to only compare properties with the same number of bedrooms and bathrooms.

PM the address and I can give you my opinion on the ARV.

Good Luck, 

David