How do you project FMV after a rehab?
Newbie here trying to learn as much as I can.
How do you project what your FMV will be after a rehab/renovation?
Example, say a property is on the market for $100k. You look at it and estimate repairs to be $50k but you know after this it will be worth $200k. Obviously you can compare to the near by market to estimate, but can you get to a more accurate number? And if so, how do you get an accurate number?
You get an accurate number by finding other properties that are similar to what your property will be, are close to where your property is, and that have sold in the previous several months. These are comparables (or comps). And by looking at how much these comps sold for -- and then adjusting those values based on differences between your property and the comps -- you can get an idea of what your property will be worth after renovation.
@Brian Caulfield - and if you are having trouble with the comps that @J Scott mentioned, partner with your realtor who will be representing you on the sell side to provide you with these and/or a Competitive Market Analysis.
Even though we buy off-market without a realtor, we use an agent when we sell a flip and he provides a lot of value-add in ensuring we have an accurate ARV. Attached is an example: https://reports3.cloudcma.com/2fd48250061ad4643f758b3d0b2edc75.pdf?1565636739
We only ask him for this if all other boxes are already checked and we just need to firm up our ARV before making the offer. We've worked together for a year now and he knows when we are serious so he's more than happy to assist.
