Lender · San Diego · Member since 2023 · 216 posts · 209 votes
3y
At the end of the day, ARV is determined by what the buyer is willing to pay. Utilizing a RE Agent that will eventually be listing the property is a great way to learn the art of coming up with an ARV. Make sure your Agent works with investors, or even invests themselves. There are so many factors that go into coming up with a value. Draw a half mile radius and gear down the bed/bath count, square footage, garage size. From there, assess how updated the finishes are. You can always start with Zillow, Realtor, etc., but do not take them face value.
Real Estate Consultant · San Francisco, CA · Member since 2023 · 109 posts · 71 votes
3y
Calculating ARV is more an art than a science. Give a property to 10 real estate agents to get an ARV and you will end up with 16 different ARVs. For us, we use machine learning and big data to predict the ARV as close as possible, however, there are several factors that sometimes the data does not account for (distance to train tracks, traffic patterns, ratio from renters to owners) that can affect the ARV differently street to street.
Investor · Jackson, MS · Member since 2021 · 657 posts · 559 votes
3y
As Johann Villalvir said, ARVs are simply best guesses in many cases. A 50 basis point uptick in interest can dry up the buyer pool that was there when you started your flip. A zoning change can do the same thing - increase or decrease the ARV. Using sites like Redfin (if they serve your area) and even Realtor and Zillow will let you see what properties have sold for and are listed for in the area you are looking at. This is why long distance investing is a challenge as a few blocks in some areas can make a big difference in ARV. Be sure you are comparing apples to apples in terms of property size, reno status, etc. Also, focus on recent sales as property can be listed for anything but as they say, something is only worth what someone will pay you for it. See if you can find a real estate agent in your area that works with investors and ask if they will run comps or a CMA on a property to get an ARV. When you get the information from several sources and the ARVs are close, you know you are at least in the ballpark. If they are all over, you need to do more research. The other thing to be careful of is over renovating . . . you do not want to be the best (and most expensive) property in the area . . . you will sit on it until the buyer that really wants it comes along. Good luck
Lender · San Diego · Member since 2023 · 216 posts · 209 votes
3y
At the end of the day, ARV is determined by what the buyer is willing to pay. Utilizing a RE Agent that will eventually be listing the property is a great way to learn the art of coming up with an ARV. Make sure your Agent works with investors, or even invests themselves. There are so many factors that go into coming up with a value. Draw a half mile radius and gear down the bed/bath count, square footage, garage size. From there, assess how updated the finishes are. You can always start with Zillow, Realtor, etc., but do not take them face value.
Real Estate Agent · Chicago & NWI · Member since 2015 · 860 posts · 521 votes
3y
Hey @Chkyla Oldenstam - yeah you will have to look at a multitude of factors for example, square feet, when are you planning on selling, the type of finishes you have in the house will also make an impact. Your realtor should be able to pull in some comparable but you will also have to analyze each house individually against the one you are trying to rehab.
ARV is just comps actually. Case study: comps in one block is $500/PSF So there are these houses: a) Selling for $450 PSF , with bathroom needs remodel and outdated kitche b) Selling for $460 PSF, with all carpets and all new but it has water damage all over.
Which one that you choose ? nothing LOL. BUT ....
If during Q2 2022 the PSF is about $1,000 and now it's selling for $700 PSF while neighborhood is $800 PSF, I would buy this house, why ? because within 3 years pretty sure the PSF gonna reach $1K again.
For me I care more about the market, than the house itself. If margin after ARV is only 20K I would rather invest the money into SVOL