@James Dale
Jim, I'm adding my voice to the chorus here.
Here's the main thing driving my advice: you're new and green. I would most definitely not get into significant renovation on your first investment buy. Play it safe, play it smart, minimize your beginning risk. There's so much to learn, especially about tenant management, that getting into renovations now beyond a cleanout, basic painting, and cosmetic repairs just adds too much risk. As far as getting into BRRRR goes, sad to say, there's more baloney floating around about profitable BRRRRing than any other real estate strategy out there. The truth is that BRRRR is not at all typically an entry-level winning real estate strategy.
Here's my perspective on calculating ARV: @Johann Villalvir here in the thread is, surprisingly, pretty spot on as a new poster (welcome Johann). But you also need to know that the whole "science of appraisal" is becoming more and more guesswork and the profession becoming ever more desperately in need of reform as the years go by. You can't trust that you'll get a good appraisal, not at all, not in the slightest.
I can talk about duplexes for days, and how to bring up their value. If you can find the right duplex and move into it while you rent out the other apartment, it's a great strategic move. But the key thing to understand is that a duplex, triplex, and quadplex's values are calculated by lenders much like a single-family, based on square-footage estimates, numbers of beds and baths, and prices in the neighborhood. That's not really what the place is worth to a buy-and-hold rental investor, however. What I do is pretty simple. I look at a duplex and figure out what I could reasonably charge for rent for both apartments if I renovated them. Multiply that by 100, and that's what I can afford to pay to buy and renovate the duplex. This is often called the 1% rule, and it works fine here in my area.
Not sure how well it will work in yours, but it's worth knowing about as a benchmark for buying single-family and anything up to a quadplex. After a quadplex, you have to get into commercial lending, and the rules/requirements are quite different.
@Dave E and @Nathan Gesner have both sounded the right alarm about leverage. You cannot afford to lose this money. An easy baseball analogy here is that you're looking for a single, and you'll settle for a bunt. This is not the time to go after every pitch swinging from the heels.
Whatever you do, don't look at the very cheapest properties on offer in your area in the very worst neighborhoods and start calculating how much money you could theoretically make on them. No beginner has ever made a dollar on properties like that in the history of real estate investing.
I know our approach seems painfully slow, but the people selling you fast-fast-fast money in real estate, especially on a first deal, are typically dishonest get-rich-quick schemers. Play the probabilities. Prepare for the long slog ahead.
One last thing, what I'm advocating is exactly what my wife and I did on our first rental buy. And we live in a duplex today. It worked for us, and it has a good chance of working for you. Good luck to you!
