Q: Am I doing this right?

[Yutaka Tso]

calculating the ARV using similar sold comps;

1). Price on sold home/sqft = $X p/sqft 

2). Finding the Average $/sqft for each sold comp

3). Comps Average $/sqft x my properties sqft = ARV estimate

4). Finding the target price for deal.

5). ARV - Repairs x 6% - fee, closing cost, resell fee = target price.

How did I do? Also would you suggest I raise the sqft on comps by 200sqft to get a better estimate? I would try and keep the same similar specs. 

But what do y’all think? My apologies if this doesn’t make sense. Also leave a vote if you think I’m on track. Thanks :) 

[Greg Scott]

Steps 1-3 are generally correct with some exceptions:

• Your comps should be of similar size to your property.  A 4000sqft property is not comparable to a 2000sft property.  The best comps are nearly identical square footage, and if you find them you don't need to do all the math on $/sqft.  
• Given the above, I'm not sure what you mean by "raise the sqft on comps by 200sqft to get a better estimate".  That doesn't make sense to me.
• You will need to adjust for condition.  If some of the comps are in bad shape, throw them out because they are not "after repair".  If you are putting in mid-level finishes, such as laminate countertops, don't use a comp with high-end finishes such as quartz countertops.

Step 5 - What you choose as your target acquisition cost formula depends on your and your business model and is not an industry standard.  Since I buy & hold, I would be willing to pay a lot more than someone that flips.