I'm trying to experiment with calculating ARV to see if it's effective.
So for one instance I have a property that is move-in ready however it's outdated..
I ran comps and found 3 comparable homes however, they are outdated as well and sold - 2 Cash Offers (I can tell one was bought through a made up LLC, which sounds like an LLC transfer - wholesale deal for an investor). The other was an FHA loan. At least for the 2 it seems like they were purchased by an investor and would be renovated I'm sure at a higher listing price in the future.
My question is, can I re-engineer the ARV calculation by taking the 3 comps, adjusting based on location, size, condition, etc. to get an average, and divide it by 65% plus Repairs to determine ARV going that route in the event that I don't find comparable renovated homes? Not trying to be lazy, but creative and wanting to understand if it's feasible.
For example, based on the 3 comps, if I got the median with the adjustments included to be $178,000, then,
Divided by 65% (Industry Standard) to equal:
Adding (20$ per square foot X SqFt = Repair Price)
= $308,846 (Let's Say $308,000)
Would $308,000 be a feasible ARV?
Just trying to be creative and see if it could be effective. Let me know your thoughts! - Thanks!
Seems very high, but I just like to get good feedback and see if being creative with this method can actually be effective!
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