Single family property rental analysis

3 Replies

Hello, 

My name is Vickiana Ramirez, and I am new investor. My goal is to own 10 rental properties within the next 3 years :). I have come across a property and I would love some help analyzing the deal. I have a good understanding of the rental analyze, but I may be using the BRRRR method. So, I am a little hesitant on how to determine a good ARV.

Asking price is $160k and I believe that the rehab cost is about $20k. The property is in good condition, It has new flooring, new carpet, and new roof. However, it does not have an HAVC system. It is a 4 BRM, 2 Bath 1310 sf built in 1963

I have looked up comps and 90% of comps are in the mid and high 200k; however, those are newer homes with about 1,000 more SF. There are also two other house houses .6 miles away that sold for $145k  (rehab needed 2,264 sf) and $160 (rehabbed 1,717 sf.)

What are your recommendations for determining ARV? Also, what are your thoughts on the deal overall. Also the deal is from a wholesaler.

Thank you in advance,

Vickiana

@Vickiana Ramirez I’m not trying to be harsh, just offering my advice.

My initial reaction is that a 2,300 sf house is not a comp for a 1,300 sf house. I don’t know a single buyer who would compare those two options in their house search.

How did you determine what the comps were? Are those the comps that the wholesaler provided? There are many good, honest wholesalers (so I’m not ripping in the whole industry) but there are also several that aren’t honest. Be careful to use true comparable properties.

I would look more closely at the properties that are the same size and condition. That would give me a good look at what this property is worth.

Congrats that you have a solid goal. (10 rentals in 3 years) I love it.

So just based on last two sold properties, here what i am seeing.  146k for 2264sqf  (64.49/sqf) and 160k for 1717sqf (93.18/sqf) ..... On the other hand you are at 160k for 1310sqf (122.13/sqf)  Is it justifiable?

Also, for BRRRR refinance at 70% cashout (Loan to value) with your mentioned figures without cost of money your ARV needs to be 260k. Do you see this ARV based on your research?

Hope this info will help you a bit. More you analyse better you get at it. Don't get emotional, let the numbers proof as to, how good a deal is!!!

@Corey Hawkinson Thank you so much for your advice, yes, those were the "comps" provided by the wholesaler. Once I looked myself, I didn't feel comfortable with the data. There are 2 new neighborhoods near the house, so I couldn't find true comparable properties :/ Again, thank you! I will do a little more research.

@Monjur Quayyum That was also very helpful! Thank you :)