The Best Way to Do an ARV Estimate in Reality?

[Sean Sullivan]

Hi Everyone! Just getting into the property space and continuing to do my homework as I wait out this period and prepare to jump into my first property using the BRRR method. I’m excited to get started and as I continue I will work to keep everyone posted on my progress so we can all collectively learn from my journey! I did have a few questions as it relates to determining ARV that I was hoping some of the established investors here could clear up fairly easily, any help would be greatly appreciated: -When it comes to determining ARV, how and when during the buying process do you specifically do that? To clarify, if you are looking at a property it is not like you can bring a ton of contractors through the property to do estimates before you put an offer in on it. Does that mean you just do your best at an ARV estimate using comps and get as close to you can to the “right” answer? -Does anyone have any good best practices when doing this?

[Kyle Bambu]

@Sean Sullivan As others have mentioned, you'll need to figure out the rehab estimate. You could certainly get some contractors in to get you quotes. Homeadvisor.com is great for plugging in certain items and estimating costs for you. Take notice of the big ticket items like kitchen, bathrooms, roof, etc. Some unforeseen issues could include plumbing and electrical if the house is really old and hasn't been updated at all. I'd also recommend taking a look at the electrical panel, water heater, and AC unit to see the age. You don't need to have the rehab cost down to the exact penny but calculate a rough estimate and throw on 5-10% in contingency to cover anything else you might have missed. 

Next step is to go on redfin. I used to try using zillow for ARVs but redfin is honestly far superior. Type in the city of the property you are trying to calculate an ARV for. Then, move around on the map until you locate the neighborhood of the property. Use the draw tool at the bottom of the map to outline the major roadways surrounding the general vicinity of the property. Adjust the filter settings to include only Sold properties within the past year and then throw a couple more filters in. Ex: if the property is 4 bed, 2500 sqft you could put a filter to show only properties up to 2750sqft and min/max 4 beds. Loosen the specifics of your filters accordingly if there are no comparables in your search area. You can also increase the search area but be very careful with this. Prices can change pretty quick depending on the neighborhood which is why I try to stay within the bounds of the nearby main roads. Ex: Your property is East of Main St in a C class area, but West of Main St is an A class area. A similar sized property is likely not the same value in both areas...an extreme example but important to look out for.

Feel free to reach out if you have any more questions or if I can help at all!