Rural areas and comps?

[Jacob Forbis]

Any investors that work in the Devine, TX area just outside of San Antonio?

I have a potential deal I am working, but am having a hard time figuring out what my ARV should be. After looking on redfin, there are only two comps anywhere near the sqft of this deal, and they are from over 4 years ago.

The way I figure it, if I am able to get the home at a good price, I shouldn't have a problem flipping it...but am I wrong? If the area is small (city population is just over 4k) and not a lot of activity, should I just pass on it all together?

[Art G.]

If the deal is that good, I would bite the bullet and pay an appraiser to evaluate it. Its like $600 out here but might be better out there since there is not a lot of action in a rural area.  Secondly, go and talk to the local realtors and ask what the market temperature is.

If you are borrowing money to do the deal then you have to factor in the extended period of time before you sell it and how much extra interest that will cost you and reduce your profits.

Finally, I use realtytrac to evaluate potential deals, but for comps I find zillow is best. Pull up your address, pan the ariel view out a bit, then click on the tab "listing type" remove the "for sale" & "potential listings" sections, and then click "recently sold". That will highlight all the sales. From there just click on each yellow circle and evaluate the home. Factor in its size as well as condition and land size.  If you still do not have current comps, then use the older ones, and factor in what the appreciation has been in your area over 4 years, usually its 3-6%/year. But you have to calculate it one year at a time. 5% for 100k would be 105k, then 105k x 1.05= 110,250 x 1.05= 115,762 x 1.05= 121,550 x 1.05= 127,628.   100k property in 5 years appreciated to $127,628.  You do the 1.05 so that the calculator keeps adding the increase to your previous number.

Google what the appreciation has been in your area. That will tell you what number to use.