Investor · Columbia, SC · Member since 2023 · 39 posts · 11 votes
I wanted to get guidelines for estimating how much certain types of repairs would cost. How do investors look at the state of a property and judge that it will probably cost x amount to renovate? Also if the ARV = Market Value + Value Added from Reno, how do you estimate what the ARV would be? Is it just the market value of sales comps in the area? But then how do you factor in the amount of value that you added to the property during renovation?
I wanted to get guidelines for estimating how much certain types of repairs would cost. How do investors look at the state of a property and judge that it will probably cost x amount to renovate? Also if the ARV = Market Value + Value Added from Reno, how do you estimate what the ARV would be? Is it just the market value of sales comps in the area? But then how do you factor in the amount of value that you added to the property during renovation?
You buy that's PP (Purchase Price) then add cost to fix up, plus ALL of your holding costs.Then you sell. The margin is what you make.
You don't add market value to value add. You add value add to PP.
When you start out get estimates from GC's (General Contractors) for the Rehad (value add). Get at least 3 estimates, for aggregating your data, and getting exposure on site you'll pick up on scope of work and costs. Ask alot of questions.
Calculating ARV is a little more complicated than I can wholly unpack here. We use comps, & other data. Keep in mind that the house will only sell for whatever a person CAN & will pay for.
Theres a bunch of good books that'll help you get some of the verbiage and concepts
J Scott's book is good & I think you can find it here in the BP bookstore.