How Comps Work Exactly

[Nicholas Duffus]

Hello BP community. I have been spending some more time researching BRRRR and I have a pretty good grasp on the idea and the steps to be taken. One thing that has come to mind while researching is how comps are done. I understand that comparing homes that share likeness with the prospective property is the basic ideology.

However, when doing comps does the location of the comp matter? For example, if a property is in a desirable location in one county, but your comps come from another desirable location in another county; or just another town over, would this drastically impact your potential ARV?

Thank you ahead of time! I will be sure to reply.

Nick 

[Greg Kasmer]

Nick - Yes, comps are very important with a BRRRR strategy. Not sure how densely populated your geography is, but I typically invest in the suburbs outside of a major city. From my experience most appraisers look for comps within a mile or two of my property within the last 6 months. If they don't get enough comps then they either 1) Expand the geography, or 2) Go back further in time (i.e. 1 year). From my experience they would likely expand geography first, then expand time if needed. From what you are mentioning I'm not sure a comp in another county would make must sense UNLESS the next county is geographically very close to the property. To help out, I would ask a real estate agent (perhaps one that you used before) to pull comps for the target property and see what they come up with. They have access to the MLS and can pull historical data easily. As a backup, I've also used the "sold" feature on zillow before, but sometimes those sold properties can go back 2-3 years and are not as relevant. Good Luck!