@Kelsey Gabhart If you have Propstream, you have a very powerful tool at your disposal. I use it for my business. Enter the address of the subject property. On the detail page, note the # of Bedrooms, Baths, and square footage. On the lower third area of the page, click on comparables. By default, it will return all sales transacted in the last year (emphasis on the previous 90 days). You have three primary options to select, cash sales only, MLS only, or both. I'd recommend the MLS option because it will let you know what people are buying at retail, and it will have the pictures submitted with the listing. Once you have done this, take these steps:
1. Adjust your distance filter to 0.5 miles
Note: Ideally, you want homes sold on the same street or very close in that neighborhood. You have a map that indicates where the comps are, so be mindful of major highways, roadways, etc., that may serve as boundaries for the neighborhood. Also, certain areas will require you to expand the distance a bit (e.g., rural areas), but try to keep it tight as possible.
2. Set your max beds and baths to the same as your subject property
Note: This will ensure your returns are structurally pretty close. If you have many comps that are different configurations, the Comp analysis will still allow you to examine Price/SqFt.
3. Next, sort your comps by sale price and examine the list more thoroughly.
Note: If you select MLS only (my recommendation), you will have images. Look for the ones staged for showings or new hardwoods, updated kitchens, updated bathrooms, etc. Exclude the ones that were sold on MLS that may be fixer-uppers, for example, a SFH sold at 40K, because that doesn't represent what a comp would sell for after repair.
4. Refine further if needed.
Note: You want to have 5-10 comps available, if possible.
5. Click Save Comps
After this, run a Comparative Market Analysis and Comp Report. It will generate a PDF with all the Comps you selected, photos, and will provide a breakdown of key metrics, including, but not limited to, an estimated ARV based upon the Average Sale Price/SqFt, which is multiplied by the square footage of your subject property.
Two other recommendations:
I'd recommend reviewing the market analysis of the neighborhood/zip code, including the sales trends. They are informative and provide a lot of insight, such as how long the average property stays on MLS before it is sold in that area.
Additionally, get familiar with the Real Estate cycle, for example, whether it's a buyer's market or seller's market, and how local factors affect sales prices. It can help you with decisions on slight adjustments to ARV. Furthermore, if you network with RE Agents in your local market, such as your local REIA or Hard Money lenders, you can bounce your estimated ARV off of them. In my experience, both types are very happy to share their expertise and experience and to help you learn. The local REIA is where you find individuals like this because that's what the REIA is about—bringing people with various sets of expertise and experience together to add value to one another's RE business.
As far as repair costs, network with a local contractor and get a rough idea about what common fixes cost (kitchen, floors, bathroom, etc.), including what a full rehab would be. I have used a tiered method for some homes, such as light, moderate, heavy rehab, and used an estimated price per SqFt for others. I also occasionally use a guide that a contractor put together for RE investor, which is way more detailed and complex. You don’t really have the time to do that much analysis, though, and can’t unless you are walking the property. So, get good at estimating repairs and add 5K (depending on how it looks) as a reserve because you don’t know what you will find. If your offer is accepted and you are under contract, use your due-diligence period to have a contractor/professional assess the repairs needed, and concur or challenge your estimate. Use your best comp as a guide for your SOW. Also, know that an experienced end buyer will also do their own diligence, so you just need to be close, not perfect. The better you get though, the more professional respect you'll generate amongst your cash buyers.
Hope that helps!
