Can You Analyze a Deal with 1-2 comps?

Question

Helloe Fellow Members,

I've started analyzing potential deals in the Tampa market, but when I run the comps, some only give me two even one comp. If I can't find enough comps similar to the house I'm analyzing, does that mean it's a bad deal? The zip code I'm looking at is 33606, Tampa FL.

Jeffrey Kops · Answer

Hi Oriana, 33606 includes Davis Island, so your looking at a very high end area where 1950's and 60's bungelow's are being torn down and replaced with multi million dollar mansions. This could be the reason your running into comp issues. If you want some help, I would be happy to talk.

Oriana Campbell · Answer

@Will Fraser

Thank you so much! I decided to redo some of the comps and kept the search more around a range rather than an exact comparison. I might be able to make this work after all.

Will Fraser · Answer

Hi @Oriana Campbell!  Welcome to the Bigger Pockets forums!  You've asked a great question here -- this depends on why there are few comparable sales.  You may be considering the property too specifically (for example if you are trying to find comparables for a 4 bed 2 bath home build in 2015 that has 2003 square feet and you are looking for an exact match .  . .  .you won't find many.  However, that isn't how you should be looking for comparables).

If, however, the reason you are finding few comps is that the subject property is in a sparsely populated area, or one with extremely few sales, then that is a tougher situation.  You'll want to consider who is buying the properties that DO sell and what are they paying for the properties that they ultimately do purchase (even if that is further away, or a less similar home)?  This will help inform you of the value, but more data points always lead to more accurate data :)

Oriana Campbell · Answer

@Stephanie Fleming,

Thank you for responding Stephanie, so what your saying is I should create a range when searching for comps?

Stephanie Fleming · Answer

It doesn't necessarily mean that it's a bad deal. Just that you need to widen your search criteria. You may be being to specific in your details