Property under contract in DC/ Issues with Finding ARV

[Lester Terrance]

Hello,

I recently got a condo under contract in the Washington, DC area (Fort Dupont). My agent forwarded a list of comps (6 months) within a 1 mile area. Most of the comps are for town homes/ row houses for the same 2/1 setup. The comps range from 150,000 - 192,000. My General contractor quoted the job @ 42,000.00. I guess my question is, If you are unsure of the ARV, how do you price your property to sell to another investor who may possibly want to rehab it? I thought about going for an appraisal but thats too much money for now. Any advice, suggestions would be great.

Lester

[Bill Devola]

@Russell Brazil sounds like he just gave you valuable advice in terms of tightening the value range on your condo.  I thought I would make a couple of other points that are important in a general sense, not just for this specifically:

To begin with, if this is a buy and hold (ie cash flowing) I wouldn't emphasize the ARV too much. Its nice to throw in and matters to a certain extent, but the monthly income generated is paramount. If on the other hand, its a potential flip you have, you can't price it without knowing the ARV. In this scenario, the rental cash flow is nice to know, but the ARV is the only thing that drives the acquisition price and your wholesale price.

Lastly, I'm not sure who made, or where the arbitrary "6 month" time frame came from, but as a RE Investor, you (should) know your market.  If its been stable the past 12 months or so, have your agent go back a little further to dig for comps.  If the market has increased 5% in the last 18 months, go back 18 months and do some rough math to get an idea of value.  But Russ is right:  don't comp condos to townhomes to multifam to .... etc.    Your asking for trouble doing that.  Going back further in time and extrapolating present day values is orders of magnitude easier and more reliable than comparing townhomes to condos.