Northwest Arkansas · Member since 2023 · 58 posts · 21 votes
I'm located near the Ozarks in Arkansas and the area I'm looking into doesnt have a lot of "neighhborhoods" - houses are much more spread out or they're single streets off of the main roads with 15-20 houses. The prices are usually (somewhat) consistent on the individual streets but I'm having a hard time finding houses that have been recently remodeled or flipped nearby to use as comps. Should I start looking farther away for comps to get an idea of ARV price/ft? How would you go about estimating ARV when you cant find any comps nearby that have been updated/flipped recently?
Hey @Brandon Stiles! I'm in Russellville, so I might be able to help. For most rural properties with very few comps, appraisers will usually let you use some common sense. If you can find properties that are similar in size and location and only vary on condition, you can just add a premium to what you find. The best option is to get a real estate agent to look at it and provide input. You could also pay an appraiser to come out and give you an ARV.
Don't widen your search radius too much. There's no good answer for how wide your search should be. I've used everything from .25 miles to 5 miles depending on the property.
I'm located near the Ozarks in Arkansas and the area I'm looking into doesnt have a lot of "neighhborhoods" - houses are much more spread out or they're single streets off of the main roads with 15-20 houses. The prices are usually (somewhat) consistent on the individual streets but I'm having a hard time finding houses that have been recently remodeled or flipped nearby to use as comps. Should I start looking farther away for comps to get an idea of ARV price/ft? How would you go about estimating ARV when you cant find any comps nearby that have been updated/flipped recently?
Thanks in advance
That's a great specific question. Exurban & rural present the challenge you so eloquently worded. This is where consensus can supplement logic. Widening your comps makes your ARV less accurate, it's really a speculative number as a house will only fetch what a person is willing to pay. Try leveraging realtors, brokers & other pros on the sales side. A CMA may help but remember your aggregating numbers. Even asking locals or out of state transplants may help. Dig deeper and see what lenders have to say, keeping in mind the conforming loan qualifications may apply. Finally as a hedge run really conservative speculation numbers. Knowledge of the area from the gut is part of the picture too. Just some suggestions, hopefully others will opine with more nuggets of information. Best of luck to you!
Hey @Brandon Stiles! I'm in Russellville, so I might be able to help. For most rural properties with very few comps, appraisers will usually let you use some common sense. If you can find properties that are similar in size and location and only vary on condition, you can just add a premium to what you find. The best option is to get a real estate agent to look at it and provide input. You could also pay an appraiser to come out and give you an ARV.
Don't widen your search radius too much. There's no good answer for how wide your search should be. I've used everything from .25 miles to 5 miles depending on the property.
Hey @Brandon Stiles. Running comps is more of an art form than it is a science. This is what my team does really well, and many investors rely on the accuracy of numbers to help them make decisions when looking to purchase. Below are some of our "rules of thumb" when running comps, but the crazier the deal the harder it is to comp. For example, my brother and I are flipping a log cabin in Tontitown right now. All the comps around it are very nice fancy homes. I wanted to see the desirability of a log cabin in NWA, so I just looked for log cabins in a 10 mile radius to see what they were selling for, and purchased the property off of that number instead of traditional built homes that were in the surrounding area.
Rules of thumb. 1. Location is most important. Try to stay in the neighborhood. If not a neighborhood then don't go further than 3 miles out.
2. Size/bed and bath: make sure you are no more than 20% different in size or bed and bath being the same count.
3. Age: my different cut offs are 1978, 1999, 2007, 2018
Hey @Brandon Stiles. Running comps is more of an art form than it is a science. This is what my team does really well, and many investors rely on the accuracy of numbers to help them make decisions when looking to purchase. Below are some of our "rules of thumb" when running comps, but the crazier the deal the harder it is to comp. For example, my brother and I are flipping a log cabin in Tontitown right now. All the comps around it are very nice fancy homes. I wanted to see the desirability of a log cabin in NWA, so I just looked for log cabins in a 10 mile radius to see what they were selling for, and purchased the property off of that number instead of traditional built homes that were in the surrounding area.
Rules of thumb. 1. Location is most important. Try to stay in the neighborhood. If not a neighborhood then don't go further than 3 miles out.
2. Size/bed and bath: make sure you are no more than 20% different in size or bed and bath being the same count.
3. Age: my different cut offs are 1978, 1999, 2007, 2018
Our SARV calculation works well in urban areas but struggles in rural areas due to lack of qualified comps. We're looking to improve the calculation by increasing the range, up to 3 miles, but without fixed or new comps its challening to derive an accurate ARV. Market knowlege and gut feel take you the distance here.