Today I went through the comps on each of the 13 properties and narrowed them down to the best 3 or 4. I didn’t really have a method to my madness, I just generally looked at the style of house (colonial, cape code, ranch,etc..) and also looked at the pictures to see condition.
Once I found the 3 (or 4) best comps I…
- Averaged out their Sale Price to get the ARV for my prospective offer house.
- Multiplied that value by 70%
- Subtracted estimated repair costs (I used a standard 50k, which is roughly 13% to 17% of ARV)
- Subtracted my Profit (I used a 20k figure)
I really have no idea for repair costs at this point so I just plugged in a value that took into account
- upgrading bathrooms
- Upgrading kitchens
- Painting entire house inside and out
- Carpeting (or hardwooding) floors
- Then I doubled the cost
With that all said, below is my comp break down and MAO’s for each property.
A few things I might look into in more detail is setting an adjustment value for extra bathrooms, bedrooms and garages for cases where a comp has more or less. Tomorrow I’ll be picking the property(ies) I’ll be making an offer on so stay tuned.
P.S. I found out a great way to get an excel spreadsheet into wordpress. If you’ve tried cutting and pasting you know it comes out all a mess and in cases like above, the spread sheet is to long to take a screen shot of. So my tip is to Highlight the Spread Sheet and cut and past it into your image editing software like Paint.net or Photoshop. Save it as a picture and upload it into WordPress. Super Easy!!
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Hi Scott –
1. 70% of ARV should already have a profit factored in, but maybe you're planning on wholesaling them and that would be the wholesale fee you are looking for.
2. The houses year built and sq footage should be factored in. Within +/- 20 yrs and and 15-20% sq ft.
3. 50k is probably high on a lot of stuff. But it really depends.
Carlson place looks quite promising, but the lot seems a lot smaller then the comps?
For Mills it would be good to see what is different about the house that sold for $400k compared to the ones in the high 200's.
Steve,
I really appreciate you taking a look at each house and analyzing them a bit more for me. Let me see if I can answer your questions..
1) I am planning on wholesaling these properties so that is the reason for the extra profit taken out.
2) Good point on the year built, I didn't think about that. As for Sq Ft, in my MLS nobody ever puts that in. It was explained to me once that the reason is realtors don't want to be sued for putting in the wrong number and later be blamed.
3) I was taking a very conservative approach with my repair estimates. Would using a starting point of 10% of ARV be good for estimated repairs when making offers then? That would put the cost between 25k and 35k for most homes I'm offering on.
Carlson: Seems to be one of the smaller lots in the comps I brought up. Is there a price adjust to be made for smaller lot sizes in this case because it's so much smaller?
Mills: Iet me relook at the houses and I'll let you know.
Thanks again
Have you made an offer yet?
I’m actually on vacation starting last Friday to today (forgot about that when I started this process earlier in the week). I will be making the offer when I get back. Thanks for keeping me accountable Jason.
I've actually been on vacation since Saturday until now. I'm going to continue right where I left off today.