Calculation of ARV of a FLIP What is the Best Way?

[John Jack R.]

I would like to know how YOU calculate ARV on a prospective FLIP.

And maybe this may differ from market to market. I am in Las Vegas.

My conundrum is this. When you run comps, you essentially get a series of points of measure;

1. Average Sale Price

2. Max Sale Price

3. Min Sale Price

4. Square footage

5. Average Sale per square foot

6. Min Sale per square foot

7. Max Sale per square foot

Now when I run a flip, my houses look almost brand new inside and out. So to compare the rehabbed product to the average sale seems to me to be asinine. Historically All my flips have sold quickly and at the top of the market price.

I do take into account the max sold price on the comps when calculating my ARV and typically I run my ARV as 80% of the max sale per square foot, making adjustments (normally down) if necessary based on neighborhood and if my flip is way over the average in square footage and this would push the total sale price way out of bounds. I believe calculating a realistic ARV is as much art as science.

Most people look at homes based on

1. Location the area they would like to live in

2. Price point or price range.

Now my strategy is simple. Offer a product infinitely so much more superior to what is being normally offered, then price is no longer an issue. Chances are, my house is not the first home the prospective buyer has viewed, and in comparison the other homes look like trash once they have seen mine, (please forgive me if you think I am being boastful). I have attached some Zillow links to some of my projects for your perusal and you tell me.

11116 Whooping Crane Lane, Las Vegas NV 89144. Purchase $194,000 Sold $300,000

Zillow Link http://www.zillow.com/homedetails/11116-Whooping-Crane-Ln-Las-Vegas-NV-89144/6909464_zpid/

4841 Anchorage Street, Las Vegas NV 89147. Purchase $225,000 Sold $326,000

Zillow Link http://www.zillow.com/homedetails/4841-Anchorage-St-Las-Vegas-NV-89147/7137596_zpid/

4913 Nebraska Avenue, Las Vegas NV 89107. Purchase $88,000 Sold $142,000

Zillow Link http://www.zillow.com/homedetails/4913-Nebraska-Ave-Las-Vegas-NV-89107/6959436_zpid/

7228 Sleek Avenue, Las Vegas NV 89129. Purchase $214,000 Sold $249,999

Zillow Link http://www.zillow.com/homedetails/7228-Sleek-Ave-Las-Vegas-NV-89129/6919527_zpid/

1831 La Villa Drive, North Las Vegas NV 89031. Purchase $164,000 Sold $205,000

Zillow Link http://www.zillow.com/homedetails/1831-La-Villa-Dr-North-Las-Vegas-NV-89031/6886798_zpid/

5409 Aegean Way Las Vegas NV 89149. Purchase $254,000 Sold $395,000

Zillow Link http://www.zillow.com/homedetails/5409-Aegean-Way-Las-Vegas-NV-89149/6900406_zpid/

The calculation of ARV is key, since if you follow the rule of 70% of ARV less repair, a lot rides on the calculation of ARV.

I am looking forward to your input. Thanks