Mistakes When Calculating a Flip ARV

Flipping a house is full of uncertainty. Common questions that can cause an investor anxiety.

Gathering comps or comparable is the primary method you will use to calculate the ARV (After repair value) of a flip.

I have fallen into the mistake of finding a house that is exactly like what we will be building. It has the same style, same number of bedrooms, bathrooms, square footage, and ammenities.

Falling in Love with a Comp

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. Just because another location is close does not mean it will value or market the same.

Getting the Location Wrong

If you cannot find houses that are very similar products to what you are building, you can start to make adjustments to the price. For instance if you will have an extra bathroom, and more square footage, an appraiser will adjust the ARV of your house higher.

Adjusting Values Too Much

I get it, sometimes it is hard to find reasonable comps. The house I live in falls into this situation. Where it is only a couple blocks of houses that are not even close to the same size, and most of the viable comps have not sold in the past few years.

Going Too Broad