MISTAKES WHEN CALCULATING A FLIP ARV

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Flipping a house is full of uncertaintly. Common questions that can cause an investor anxiety are wether buyers will like it enough to put in an offer, how much will the rehab cost.

One place we can look for answers to many of these questions are comps. Gathering comps or comparables is the primary method you will use to calculate the ARV (After repair value) of a flip.

To be safe when picking comps, you want to identify several houses that are a very similar product to what you will be building and average them.

Falling in Love with a Comp

By falling in love with comparative sales, you are opening yourself up to the risk that there were other mitigating factors to cause the sale to occur at that price.

Getting the Location Wrong

I am sure you have heard the mantra: Location, location location. It is true, location impacts the value of real estate tremendously. Real estate is hyper local. 

Adjusting Values Too Much

If you cannot find houses that are very similar products to what you are building, you can start to make adjustments to the price. The more you adjust the value the more subjective it gets.

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