Yesterday we began talking about the importance of getting good comps and planning the sale of a rehab property. Continuing in that vein today I wanted to talk with you guys about a few more items to focus on when looking over real estate comps. When researching and scouting the neighborhoods for potential investment properties
- Condition – if the property is new then pull new comps, if it’s older then pull older property comps. This is actually where trying to figure out a “subject to” value or ARV can be tricky. When trying to determine the after repair market value of your rehab property, it is important to take into account the condition of the property after the work is completed. Then try to pull comps in the neighborhood that have also been rehabbed to
- Age – pull comps that are the same age as the property. Try to keep within about 5 years older or younger to your property. Always keep in mind that a rehabbed property will not hold the same value as a new one.
- Gross Living Area/Sq Footage – pull comps with the same approximate sq. footage as the subject property. Try to keep it within 100 sq. ft and no more than 200 sq ft, if at all possible. Be sure to consider bathroom counts as well.
- Basement – If the subject is on a crawl space or slab, then pull comps on crawl spaces and slabs; likewise if the subject is on a basement, then pull comps on basements. Try to keep the sq. footage of the basements as close as possible (same as above), within 100 sq. feet is ideal, but no more than 200 sq. feet, if at all possible.
- Garage or Carport – again pull same for same.
- Lot Size – again pull with similar size lots as the subject property
In my next