ARV for unique homes

[Gary Hert]

I have a question about how to calculate the ARV of a home in a unique situation. The home is located in a semi-rural area and is directly across the street from 10 low income housing units. The low income housing is only one year old and looks really good. I would not be concerned at all if it was not for the large "Low Income Housing" sign that is located on the property.

If similar homes are selling for $200K, how would I calculate the discount (if any) that would be required to sell this home once it is rehabbed?

Thanks in advance.

[Will Barnard]

One of the many things I have learned over the years of RE investing when it comes to flipping is to stay clear of non-conforming properties. If you do go after such a deal, as others stated, be ultra conservative on your exit value. Look at the prices of comparable sold comps in the surrounding areas and get a feel for what they are worth. Then for yours, adjust downward by at least 10% for such a detriment, and possibly more.

For instance, I usually stay clear of houses that are on main busy streets. However, if and when I do touch them, I auto deduct 10% from the value, then deduct more based on other factors like, how busy the street is, what other negatives it has, what other positives it has - which reduce the discount, and how quick I feel I can get in and out. You must make sure you have extra room so that if need be, you can lower price to "fire sale it" and still get out with your wallet in tack.