Steps for Determining ARV

[Nat Rojas]

I'm attempting to be conservative when pulling comps for value add acquisitions in Baltimore City, MD. The areas that don't have a sufficient/good comps, then I feel like I'm leaving an opportunity.

I use the following:
Radius of .25 miles out from the subject property
Closed within 365 days

From there, I get a sense of the sales within the entire area for the past year.
Then I narrow both parameters to ideally:
Radius of .1 miles out from the subject property
Closed within 90 days

I'll look at Bed/Bath count, Sq Ft, type, property condition/finishes

First question: what could I do to improve my process for determining ARV?
Second question: for those properties that don't have comps, what should I do? I've heard of a valuation method utilizing sq ft or price per sq ft??

If so, could you elaborate on how I can pull that number?

Thanks!

[Will Fraser]

HI @Nat Rojas, the process you have lined out is great!  You should weigh results within the closest proximity (0.1 miles in your example) more heavily than those further away, and you should weigh the results with more similarities to the subject property more heavily than those with less. 

If you want to mimic an appraiser's approach (wise move since their are the ones determining value) you can search up to 1 mile away and up to 6 months before to be easily useful in comparing to your subject property.

If you can't find a comparable sale to your subject property then the next best alternative is to take similar properties and adjust them to match the subject property (for example, if your comparables are all 3 bed 2 bath homes and your subject property is a 4 bed 2 bath, you might ADD something like $4,500-8,000 to the sale price of the comparable properties to indicate the likely value of your property.