MISTAKES WHEN CALCULATING A FLIP ARV

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Common questions that can cause an investor anxiety are whether buyers will like it enough to put in an offer, how much will the rehab cost.

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.

Getting the Location Wrong

You can use a real estate agent to assist in making sure the comparative sales you have chosen are in the same areas an appraiser would consider for choosing comparatives sales from.

Adjusting Values Too Much

The more you adjust the value the more subjective it gets. I have seen people add huge amounts of value because their property had more square feet than the comps.

Going Too Broad

By increasing the search radius for comps, there is a greater likelyhood that the comp is in a location that is either in higher demand or less demand than the property you are looking at.

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