Renter · Kelowna, British Columbia · Member since 2015 · 2 posts · 0 votes
Greetings!
I am at a loss. I have tried doing some research on the forums as to exactly how to use ARV, and I'm simply coming up with threads on how to calc ARV.
I understand the core concept between getting your main property, and then 3-5 comps you adjust to reflect the apples to apples number, but what I'm failing to grasp is the why you adjust other properties to your focus property, and not the other way around?
Or, in more simple terms: Now that I know what all the properties SHOULD cost if they were all the same property, what good does this do me? One would assume you would try and adjust the property you want, to the costs of the ones in your market to see how much repair wiggle room you have to sell around the current (retail?) market value.
Because for the most part you are hopefully looking at buying distressed properties of some sort. So you need to see what other houses of the same caliber are going for in that area to determine if you are looking at a good deal or not. Ideally you should be looking for a property that is 30% below the comps minus repairs you will have to do to make it a good deal for you to have the equity to sell it down the road, whether you are flipping or holding for a period of time.
Meaning, even if you are planning to hold a property you need to be sure that should something come up, you can still quickly sell the property and not be underwater on it and still come out ahead.