Rental Property Investor · Dallas, TX · Member since 2020 · 40 posts · 8 votes
Good Afternoon,
I have a two story 3bed 2bath 1962 built house under contract for 295k in Irving, Tx. The house needs significant work i.e.
Foundation is off by 5 inches,
Replace whole plumbling & redo bathrooms,
Leak on roof,
Put a new HVAC,
Turn a room into a bedroom.
My question that's a lot of capex so, the price of the house is below market value and we are buying as is, however after we did inspection it's a lot of big ticket items that's required to be fixed and need to put alot of significant work and money. How do I know ARV & run comps myself? Do realtor give estimate off certain website?
Note: Foundation company quoted me 33k to fix the issue.
Lender · Houston, TX · Member since 2023 · 235 posts · 255 votes
3y
Your realtor should be able to pulling sold comps from the MLS. TX is a non disclosure state so that information won't not be available unless you have access.
When you're running your ARV comps, check to make sure its a similar type of home, same neighborhood, year built, finishes, and etc.
That should help you make a decision on whether or not this is a good deal for you.
Hey Annup, It sounds like you're dealing with a potential fixer-upper property that requires a significant amount of renovation and repairs. Assessing the After Repair Value (ARV) and running comparable property analysis (comps) is a crucial step in determining whether the investment is financially viable.
To do this yourself requires alot of research. I highly recommend working with a realtor
Comparable Properties (Comps): Look for recently sold properties in the same neighborhood or nearby that are similar in terms of size, layout, condition, and features to the property you're considering. These properties should ideally be within the last six months to a year. Try to find at least three to five comps for a more accurate picture.
Adjustments: Compare the sold prices of the comps to your property's current condition. If your property needs significant repairs, you'll need to adjust the sold prices of the comps accordingly. For example, if a comp sold for $350,000 but your property needs $50,000 in repairs, you might consider the adjusted comp price as $300,000.
Calculate ARV: Once you have gathered all the information, you can calculate the ARV by adding the estimated cost of repairs to the adjusted comp price. For example, if the adjusted comp price is $300,000 and the estimated repair costs are $100,000, your estimated ARV would be $400,000.
If you have any questions about loans/financing please feel free to send me a DM.
I have a two story 3bed 2bath 1962 built house under contract for 295k in Irving, Tx. The house needs significant work i.e.
Foundation is off by 5 inches,
Replace whole plumbling & redo bathrooms,
Leak on roof,
Put a new HVAC,
Turn a room into a bedroom.
My question that's a lot of capex so, the price of the house is below market value and we are buying as is, however after we did inspection it's a lot of big ticket items that's required to be fixed and need to put alot of significant work and money. How do I know ARV & run comps myself? Do realtor give estimate off certain website?
Note: Foundation company quoted me 33k to fix the issue.
Thank you. Looking for suggestions!!
Once you've spent the money on new HVAC (10K), both bathrooms (15K) (not to mention drywall and painting after plumbing refurbish) and spend 50K for the foundation, what will the property be worth? That's your ARV or After Repair Value. You need to look at that number above all because it drives the eventual loan. Keeping the costs (including carrying costs and closing costs of all loans including acquisition and the subsequent refinance) below 70% (or less) of the ARV should be your goal. If it's not, move to the next scenario.
Then, once you've determined your new loan amount, you have to make sure the rent(s) will cover the mortgage. If not, move to the next scenario.
Lender · Houston, TX · Member since 2023 · 235 posts · 255 votes
3y
Your realtor should be able to pulling sold comps from the MLS. TX is a non disclosure state so that information won't not be available unless you have access.
When you're running your ARV comps, check to make sure its a similar type of home, same neighborhood, year built, finishes, and etc.
That should help you make a decision on whether or not this is a good deal for you.