Best Ways To figure out ARV

[Roman Stefaniw]

Hello, just wondering what tools people use to dictate the After Repair Value of there properties. Thinking of getting into the BRRRR strategy.

Any advice or links to other forums would be greatly appreciated. Thank you!!

[Mike H.]

There is no magic tool to calculate the ARV other than getting like-kind comps from any of the online services (realtor.com, zillow.com, etc). Then bump your property up against other houses that are similar to it and that have sold within the last 6 months.

I personally like zillow because its easy for me to enter the address of my house and then set the filters I like to use and see sold homes close to it - how much they sold for and when.

Here is typically how I filter my results:

1) Enter the address of the property
2) Set the square footage filters to +/- 150 to 250 square foot.
So if its a 1,300 sq ft home, set it to 1100 to 1450.  If 2,000 sq ft home, I might set it to 1750 to 2250. 
I would probably say to go 20% under to 10 or 15% over in square footage range based on your subject property.

3) Return houses sold within last 6 mos. 

4) Set the age range of the homes based on the age of the subject property. The newer the house, the shorter the range. i.e.
If house is built in 1940 I might set the range from 1900 to 1965.  
If built in 1970, I might set the range from 1920 to 1990.
If built in 1990, 1960 to 2005
If 2005, 1990 to 2010.

And then search. Then look at the houses closes to your subject property and try to find houses that have the same number of levels. i.e. Ranch vs two story.   Don't worry as much about bedrooms or bathrooms. Those don't typically dictate whether the house is a comp or not. Moreso they just get adjustments.

So a 4/2, 2,000 sq ft house will still have a 3/2, 2,000 sq ft house as a comp. Just a matter of whether they give you an adjustment for having the additional bedroom. In the real world, 4 bedrooms sells for more than 3 (typically).  But I've had several appraisals over the years where the appraiser says they don't adjust for bedroom count.

Bathroom count they would. So a 3/2, 2,000 sq ft house would get an adjustment if the closest comp they could find was a 3/1.5 bath, 2,000 sq ft house. But half baths aren't work a whole lot (3k?).  Basement unfinished is worth 7 to 10k depending on size. Basement finished maybe 10k to 15k depending on bedrooms or bathrooms in the basement. Fireplace worth about 2k to 3k. Deck/patio about the same.