MISTAKES WHEN CALCULATING A FLIP ARV

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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, how long will it take, what will the market be like then, and will the appraisal  support it?

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. This is why it is dangerous adjusting the values by too large of a factor from the comps you have found.

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