hey guys my name is Brandon Turner with BiggerPockets comm and today I want to show you a two-part video on how I estimate both the after repair value in other word what in other words what a property is worth when it's all fixed up and what purchase price I can buy the property for so I want to flip this house a lead came in and I want to flip that property I want to fix it up and sell it and make a profit but how do I know how much I can pay for it well that begins with knowing the ARV the after repair value how do I know that well we're gonna look at both those things today so the first half of this video is all about determining the ARV and to do that you have to use what's called comps now a cop is short for comparable sale it means another property that recently sold for about that similar in style and age and and number of bedroom bathroom whatever so we're gonna look at how to look at different comps how to find those comps how to estimate what your property will sell for then the second half of the video is going to look at actually running the numbers on that flip to find out what can we actually pay for it can we pay what they're asking to it to pay less where does that make sense so I'm gonna be analyzing a deal for a fixed and flip property we're gonna come up with an actual number for an ARV we're going to come up with a number that's worth buying it at and I'll be able to hopefully today sometime make an offer on this property so that is what this video is and I hope you guys enjoy it if you do enjoy it if you're enjoying this make sure you give me a thumbs up here on the youtube video that just helps us out a lot and then before you the video last thing I just want to invite you guys if you're not a member of BiggerPockets com come check out BiggerPockets calm and Z free real estate investing social network marketplace and information hub in other words you can learn everything about real estate you wanted to you can connect with other people and you can just grow as an investor and do deals and buy and sell properties and and really grow as an investigator it's like Facebook or Twitter or LinkedIn but only for people who want to build wealth through real estate investing so I come check us out and I'll see you over there so with that let's get to the video no more chitchat I hope you enjoy this and again give me the thumbs up on YouTube if you liked it I think we'll see you later okay so what I'm gonna do is I'm going to show you guys this property that I'm looking at it's a 503 west westerly street in Aberdeen Washington this is the property that came up on the market and I wanted to see it looked like a potential for a flip there's an extra lot included it's a huge home it was need some work I can kind of look at some pictures on this on this listing that my agent sent me and I also can find this on Zillow or on realtor.com or something like that but I can see like the home doesn't look in terrible at kitchen look pretty rough but it doesn't you know it doesn't look like it's an awful complete awful shape so it's a very high potential I think for this property but what is it worth I mean is it worth 200,000 is it worth 150,000 when it's fixed up is it worth 300 I don't know so I'm gonna figure that out so to do that I'm gonna like I said talk to my agent and have them send me a list of comparable sales now I don't want him just to send me every property in my entire area that we just get overwhelmingly with data I don't care about every property I want similar properties to this one so what I did is I asked for if he could send me in this zip code which is a town of Aberdeen I asked him to send me any property that's priced between 100 and 200 thousand knowing that a hundred is on the low end to Hans is probably on the very high end for this I could have gone 300 and you know and I probably have been okay and maybe I even did say 300 all I did good okay so I'd set up to 300 thousand just cuz now we have a wide range of prices and I said I want it in this zip code within a certain radius of this property so he took him maybe a minute to send me over this list and this is what I see now your agent might be different when they send you the list might be a little bit different that's okay but this is what I got it's and click the following link to view the listings I click this and I'm going to end up on a list of properties so this is my agents kind of accomplice now you can also get this in physical form or again your agent will probably have a different it will look different the numbers are what matters so don't worry about how it looks here but let me show you a few things first of all I can see there's a prospective house 503 westerly right there they're asking 105 and I can see that is a four-bedroom two-bath 2,600 square foot property again I can look at more information this is a listing he sent me and I can see a lot of stuff about this property I can see that's not fixed up it needs a lot of work I can also go down and see some other things I can even look at a map of a if I wanted to granted I think the map is right here I'd rather go look at the Google map honestly so 503 westerly Drive Aberdeen I'd rather look at the Google map to see exactly what we're talking about so here's where this property is in fact here's even a Google Street View of it which is kind of cool let's look at the street view to see what this property looks like okay there it is it's got some funky stuff here I can look at on the neighbors I can see that the location is fantastic in fact my real estate agent lives right up here yeah I mean it's a fantastic neighborhood I love this area I think it's a fantastic property so anyway so what we're going to do is look for similar properties to this so this one's a four-bedroom two-bath 2,600 square foot in this hill area this nice area so I want to find some other properties that are fixed up in this neighborhood so to do that there's a couple ways one I can just scroll down this list here and there's a hundred and eighteen properties and by the way I don't if I mention this but I want to make sure these were sold in the last I think six months is what I told them but that's that's what I want I want to look recent sales so I can scroll through this one at a time and you look for all these properties but this can be kind of difficult so what I'm going to do instead I'm gonna check the map search and see if I can look there because again I don't care about these properties over here in Central Park I don't care about these ones on the south side those are not going to be the same all I really care about is these nice houses that are up on this hill and now check this out now we've got only a few to choose from so here's what here's the one we're looking at 105 this one across the street is it was a 3-bedroom 1.75 bath for 150 9500 westerly Drive it's sold for a hundred what I say one hundred and fifty nine thousand so let's look it for more information I'm gonna click the MLS up net open it up and here we go this property which is located directly across the street I can see some stuff I can see that it went for eighty four dollars a square foot I can see that it's a 3-1 1.75 and our other property what was it it was a 4-2 so our this property's going to be our property will probably be worth more than this one when it's fixed up I mean that's not for sure there's a lot of things that go into it like age and other thing and our properties 1957 this one's 1959 interesting this one's only 1872 square feet this one's 26 37 square feet so again our property is better than this one in those ways this one has a garage that's attached a you know we can look through some pictures on this and see what now you can see this one's fixed up this one's really nice right it looks really pretty got nice white cabinets it's got finished stuff it even looks like it's got maybe even staged a little bit they got some tile I mean they did a nice job somebody lived here is it wasn't a flip it looks like somebody lived here nice big backyard beautiful backyard it's really nice build back porch so again this is this is a pretty good comp I actually really like this one and I know that ours is going to be worth a little more again this one's at $84 a square foot so if I want to do some quick calculation I can figure out what's the price per square foot this one went for and let's look at this one this one's 2,600 square feet 26:37 and if we multiply that times the square footage on the other one which was 84 dollars a square foot 84 94 we get 223 so if we use just square foot cost per square foot we could estimate maybe 223 now I think that's high you know especially because maybe the square footage is found in the basement maybe I'm not sure in basements don't valued quite as much but anyway at least it gives me an idea we're probably higher than this property here then this 500 and that one for 159 now one thing I'd also like to look at is how many days on market it lasted for let's if we can find that in here sometimes they include it and sometimes they don't but it's a nice number to know let's say we know that they listed it at 159 and they sold it for full price list price sold price so we know that does it tell us anywhere days on market unless I'm missing it I don't see it we can see lot size 8,000 square feet in our property that we're doing is 5700 smaller a lot okay so we maybe want to deduct a little bit for that maybe not you know quite as much so again I don't see anything that has to do with I don't see anything has to do with days on market here which is a kind of bummer I can ask my agent if I wanted more but I'm guessing because they didn't drop their price it probably didn't last long so okay so let's go back we know we now know that this one is a decent comp so let's go back let's zoom in again on our map and that one we're getting with 159 I could write that information down you have a pretty good idea that we're probably gonna be higher than that for an air V what about this one over here whoo 139 but it's only a 2-bedroom 1-bath that's not a good enough comp for me I want bigger than two could we're talking for two very different here's one a 3-bedroom 2.25 baths sold for 152 it's over here just a few blocks away here's another one over here this one sold for 224 928 square 100 square feet five bedroom three and a half baths okay this one's clearly a bigger house a little bit but very similar right so let's look at this don't mind my dogs barking they do that sometimes so they don't like the post off host man when he comes to the door yeah all right so we're gonna scroll through this one real quick and just kind of look they did a really nice job on this I mean look at that back inside stainless steel nice cabinets all this cool stuff of course this this the room here is kind of ugly look at that I don't know it's family room but and we can see it's a two-car garage on this one I mean this one's definitely a nicer property right we can all I think we all agree that maybe not nicer I mean they had a lot of wallpaper that's interesting that's not very modern we can see it's got a lot of that paneling even that's not very modern look at that you know interesting so the house is nice it's bigger it's got a little bit nicer but it's still not completely updated so this one could be a decent comp as well for us but I'm gonna guess this is probably because of the size because it's got five bedrooms and three and a half bathrooms this is definitely probably more expensive than ours is going to be so now we've got two properties that we've looked at one at 1:59 and one at 2:24 I'm going to assume we're going to be in between there somewhere so that tells us a little bit so let me go back go back to our map again and this time let's look at what else we can do here so this one was a three-bedroom oh yeah we look at this one another 3-bedroom 2.25 bath for 150 - let's take a look at that one oversized bay windows in the living room sets the home apart wide open spaces mid-1970s Rambler we're looking at 2,100 square feet a little smaller three bedroom two and a court 2 & 2 2 & a quarter bath this one again was a 4-2 so one less bathroom or a you know one less toilet and sink but it's a you know four bedroom now our house is 1957 this one is 1973 so it's a newer house might be worth a little bit more because of that and definitely it's got that nice split driveway it's got some nice stuff here inside look at that brass light that's not cool that is not an updated house I mean it's fine but it's not a completely updated house at all in fact I would say it's it's a smaller house it's not I mean look at that cabinets and counters of yellow counters ooh things hold for 152 and this is not thick I mean look at that oh ha all right I mean it's not the worst thing I've ever seen but it's definitely not fixed up in remodeled I mean this is a just a standard house right here I mean I don't even know if they painted but it's got that nice outside its got a nice driveway nice lot it's 10,000 square foot lot that's huge now according to the listing it says extra lot included that's interesting they say it's only 5,000 square feet I bet you anything that's only one of the lot I bet there's a second lot on there that's probably equal so it might be ten thousand so what does this tell us I'm going to go ahead and say that our property is probably worth more than this one because this one's not completely fixed up this one's not beautiful but you know it's a good number a good thing to look at let's go back again to our map again and there was one more that I wanted to look at here oh there goes a dog all right so we're gonna look at this property right here that this one I here for 214 three-bedroom three-bath property all right so Bel Air home same neighborhood locate end of a cul-de-sac 3-bedroom 3-bath get interesting we can see that this property has 2,200 square feet so again very similar to ours at 26 a little smaller this was built in 73 again newer house three-bedroom let one last bedroom but the difference between a three and a four is not usually that big three bathrooms so it's got an extra bathroom that Mars doesn't have alright because ours is only two bathroom let's look through this thing I mean outside looks fantastic they did a good job this might even be a flip outside there's a backyard looks real nice inside look at his Greenwald new this is not a flip Wow I mean it's got wood floors which are pretty that green walls are old cabinets old counters so even this one is not a was not a was not a flip interesting I mean this is a this is mediocre I would say like this is nice and maybe it's good enough for for selling but it definitely wasn't a flip look at that pink look at that oh yeah I mean this is a fine house it was empty which is which is helpful to sell a property but I can see this is not the world's best thing but there is a two-car garage which is going to add some value you know so I this one at 214 newer house I would probably guess that ours is probably going to be valued somewhere around this one maybe slightly lower right because this one might appeal to people because of this because of the the newer property because it is clean it's empty it's got a good amount of square footage I would say ours could be worth a little more I think we could probably justify a little more than this but again ours is built in the 50s going back here again and a lot of that's going to depend on how nice we fix this thing up correct like we could fix this thing up really nice or we can fix it up moderately so you know we now looked at four or five properties in the area we can go back and if we want to look at some more in this area there's one over here on six which is similar but it's not quite the same neighborhood was that 109 only 1,300 square feet much smaller house and kind of a weird-looking one but interesting so again different neighborhood I'm not probably I'm going to look at that one because in I know my area I know this area is very similar so now we've looked at you know a few properties now here's a few yellow I think that means uh pending I think that's what closed a this one was Green okay yeah so this one didn't sell interesting so two fourteen didn't sell I didn't notice that the first time this is just the list price of two fourteen so I want to be very careful about looking at properties list price that means it hasn't sold yet what I really care about are the sold properties the red ones so again we looked at this one and we thought that we were better than the one fifty two of this one we thought we were probably better than that one we looked at this one over here at 159 we thought we were probably better than this one directly across the street because this one was a 31.7 ours was a 4-2 ours has more square footage this one had a little bit larger lot size I would say we're probably slightly better than this one at 160 so I would say an air V for us personally again this is not an exact science but personally I'm going to look at this and say we're probably in the 175 to 200 range you know judging that this one's the highest-end 225 that one we're definitely more than the 159 and we're probably more than this 152 I would say that we're probably in the 175 to 200 range I would feel comfortable probably priced in my house at 199 hoping that it sells around there and maybe lowering the price down to 175 as a as I get it done now kind of price and so at the end of the day I think 175 is probably my bottom end I think 199 is probably realistic and I think probably 115 is probably high and so what I'm going to do is when I enter my numbers I'll probably use somewhere in there between the 175 and one and 200 let's just say 190 so hope that helps you guys figure out some comps if you have any questions of course jump on the BiggerPockets forums and you will learn a lot more about that and again I'm not an appraiser this is just my method to my madness so when I go and enter numbers into the rental property calculator which you can get to at BiggerPockets comm slash calc or BiggerPockets comma such analysis that'll be the landing page I can run the numbers based on that ARV okay so now that we've analyzed the property and kind of find out our a RV we're probably sitting around 175 like I said the low end to 225 or 215 the high end probably somewhere in the middle why don't we just say 190 as our starting a RV we can adjust that later as I talk to my real estate agent I'm going to talk to him cause he's the one selling the property and I'm going to get his opinion on it and we're going to find out exactly but in the meantime let's just check didn't run the numbers at 190 you guys up for that okay let's go around the numbers we're going to use the bigger pockets rental property calculator so what I'm gonna do is go to go to bigger pockets comm slash analysis bigger pockets that consolation analysis takes us to the landing page for the bigger pockets rental property calculator house looping calculator and wholesaling calculator so you can learn all about it in here if you want to look more about it and I'm going to click start here to start my analysis and we're going to do the numbers as a flip we're gonna run it as a flip here so fix and flip analysis some reporting tool we're gonna start a new report we want to call this the you know what was that property it was a let's go back to it and look a little bit the westerly street house so I'm gonna give it a name westerly street house just so I can identify it property address was where were we at 503 westerly street at sea was Aberdeen Washington 95 to 0 we're gonna add a photo if we want to hey why not okay so let's go look at this I'm gonna take a screenshot my little photo of this and I'm going to actually upload that photo here like so sales description we don't have to include that but you know what I want too so let's put that in there real quick right there okay other property features if I wanted to add things like this is a four-bedroom two-bath house it is how many square footage again we don't have to do this but I like to 26:37 and it was built in nineteen was a fifty 1957 okay next step page to purchase info after repair value what do we think this is worth once all fixed up I'm gonna go with 194 now I think in all honestly I could probably listed at 299 lat down a little bit in negotiation so 190 after repair value our desired profit what do we want our desired profit to be on this property well what do you want on a flip for me I want thirty thousand dollars minimum because I have a partner that I got to split it with that means 15 apiece great estimated repair costs what does it cost to fix this up now we don't know we haven't been to the property yet and obviously we can adjust these numbers later as we know this is quick and dirty to decide if I want to even offer on it so for me looking at the pictures I saw that it needed a fair amount of work and it a big property it needs new cabinets I can see that it needs a you know all new paint probably all new flooring I'm gonna guess right now that this is going to be a $40,000 fix this is my guess right now again I can adjust that later and if I wanted to expand the cost and go step by step through this property I could but honestly I just don't know right now even what it's gonna it could be 30 it could be 60 thousand I don't know but 40 I think is pretty reasonable estimate without actually going to the property and that's all I'm trying to do right now is just get a reasonable idea is it worth looking into okay purchase closing costs how much are we gonna pay for closing costs on this property in my area typically Emily looking at around $2,000 for that sale closing cost when we go to sell the property when we go to sell it how much we're gonna pay in closing costs it's pretty not counting and commissions we're not counting real estate agent Commission's I'm gonna go ahead and guess another $2,000 there and actually people always ask the seller to contribute a little bit for their closing cost so why don't we go a little more me conservative go 4,000 for sales closing costs and now we have our agent Commission our agent Commission what does the agents going to make on this deal to sell it typically in my area 6% so I'm gonna go ahead and type in 6% here okay so at this point six percent commission there and now we want to go with monthly holding cost what's it costs to hold on to the property now I can expand it and go one by one monthly loan payment property tax electricity water garbage HOA we could put all those numbers in and it will add it up here for us but instead we're just gonna put in one solid number there I'm gonna go ahead and say just 17 I don't know how about 1,700 bucks a month that's assuming I'm gonna be paying for a hard money lender to fund the deal I'm gonna be paying for you know a few other things like waters you know all the sewer garbage I'm gonna paying for the mortgage and we paid for in sure taxes all that so I'm just going to guess right now 1700 and I know that just because I know about how much all these added together are if you want to take a minute and add up each of these one at a time it'll add it up for you and put it right there so 1700 the number of days is going to take the sell you know for me on this property I'm probably looking at about two months worth of rehab and probably another two months to sell it so probably 120 days for months and then let that's it that's three pages one two three sales info and then we hit calculate results let's see what this tells us all right here we go so at the top we got our nice picture up there we've got our address here and then down below according to the data you provided you can afford to offer ninety five thousand eight hundred to make a profit of thirty thousand this is based on an ARV of nine hundred ninety an after repair value of one hundred ninety I rehab budget of forty thousand and holding cost of six thousand eight hundred okay so there's our number ninety five eight well what are they asking for the property well remember we Darrin the numbers they're asking 105 when we looked at earlier so we're actually very close if if this is key guys if that thirty thousand dollar number I mean it is if the sorry the forty thousand dollar rehab budget number is correct so again we after a pair value our profit our maximum allowable offer and our rehab budget now what if the rehab budget was actually turns out to be fifty thousand dollars we should go look at that why don't we go do it so you scroll down to the bottom and by the way you can see all the financial breakdown how did they come up with those numbers we can look at the auto repair cost if we had broke them out one by one which you didn't so we could have looked at exactly how that made up that forty thousand we can even look at our hypothetical hypothetical profit if we held it for 45 days or 90 days or 270 days it's going to depend on how long you hold a property for which I love the hypothetical because you got to look at what if right we can also see our return on investment on this too but let's go ahead and just click Edit report and go back because what if what if it was we were going to do this for um what if the repair costs were more what if there were 50,000 well let's do it all we did is we want to change the fifty we go down we calculate results and now we've got a maximum allowable offer of eighty five so here's the point at this point now I've run the numbers and I know that I'm in ballpark right I know that I'm very close to where I can make an offer I'm not you know it's not perfect but I'm close now I don't want to necessarily make an offer yet because I don't know how much the repairs are I need to get a better idea but now that I know I'm in ballpark I'm gonna go look at the property I'm gonna go over there I'm gonna walk through it and I'm gonna get an idea am I really in my all right is it really a 20,000 rehab is that a 30 is it a 40 is that a 50 is it a 60 where am I in there in the rehab budget and so I'm going to run those numbers and once I have a solid good idea of the grasp of the numbers I'm going to pull up my phone while I'm there with my agent I'm going to edit this report on my phone and I'm gonna get my correct number then I'm going to go make an offer at that number every property has an 'a has a number right now that number might be negative on a really bad property but every property has a number that I could offer on it to make it worthwhile so in this one potentially let's just say I go look at the property and it is a $50,000 rehab that's what it's going to cost now if you're not going to estimating rehab costs make sure you read the book on estimating rehab costs by Jay Scott you can find an Amazon or go to BiggerPockets comm slash flippingbook but so I'm gonna go there and I'm gonna look at the property and if it comes at 50,000 that I know that I could offer eighty five eight guess what I'm gonna do I'm gonna offer 85 eight cuz I know that that's where I feel comfortable now I'm no longer scared I'm no longer worried I'm gonna make that offer now a couple things I'm gonna make that offer because I know that I could probably get a hard money lender you probably should know about how you're going to afford the property if you're not sure what a hard money lender is just search Google for hard money lender BiggerPockets and you'll find an article or a video that I made about it but I'm they're basically just lenders that lend on flips so I kind of know how meant to finance it I also know that I'm gonna put in contingencies what's a contingency well contingency says I'm offering you this much however if I don't or if I discover XYZ I can back out of the offer now what's XYZ it's inspection so I'm going to do an inspection contingency that says I have a certain number of days to check out the property so all for example for this one I'll probably say I'm going to do a 10 day inspection period and if I find something that period that I don't like that was different than I thought I can pull out and not lose any my earnest money or my anything like that I can pull out without a problem and now will they accept eighty five eight I don't know but it's been on the market a long time so there's a very good chance they will now what if the what if the rehabs only forty thousand well even better right so again we're we're finding out where works we're making offers because I have a number I feel confident on if they say no it's okay maybe next month they'll say yes I'll reoffer again or maybe I'll do all I know then analyze another property and so I recommend people all the time if you want to get into real estate if you want to start doing deals you got to start analyzing deals all the time analyze a couple deals every single day I mean here the challenge to you three a day if you want to flip houses analyze three deals every day that's roughly a hundred every month and then anyone that is comes close like this one's pretty close for me make an offer on it figure out how you're gonna finance it whether you want to use a partner whether you want to use a palm equity line of credit what do you want to use a regular Bank loan portfolio lender whatever if you want to know more about financing go to BiggerPockets comm slash no money you pick up a copy of the book that I wrote called the book on investing in real estate with no and low money down but again you you find you make those offers on let's say 10% of them so you're making maybe ten offers a month and maybe nine out of ten are going to be rejected but what if it got one out of ten what if you got just one out of ten accepted and you only offer them one out of ten that you analyzed I mean at the end of the day you can make some like you could buy a house a month doing with those numbers so again that's kind of how I look at a deal that's how I analyze it that's how I I run the numbers that's how I even look at comps to figure out if it's worth buying or not so hopefully this video helped you guys figure out exactly how I go from comps to or you know a deal that comes in a lead that comes in to making an offer on a fix and flip property again sorry if this video was a little bit jumbled and jumping around but this is my real like this is how I do this in fact I made this video today simply because I wanted to offer on this property so I thought heck why don't I just make a video to show you guys exactly my process so that's how my brain works total time it takes to do this probably 20 minutes maybe to do a to do a full analysis and look at comps and not too bad so again hopefully this helps you guys if you did make sure you give me a thumbs up on this video on YouTube here if you liked it and let me know that you thought it was cool then you want more videos like this other than that I'll see you guys around bigger pockets make sure you check out the bigger pockets podcast that bigger pockets calm slash podcast or in the iTunes Store if you're interested in picking up any of my books go to bigger pockets comm slash books no bigger pockets that comes out store that's what it is bigger pockets that comes out store I make sure you check that out and yeah come join me on a webinar I do webinars every week and we analyze deals together for free it's totally free to join come to a live webinar just go to BiggerPockets comm slash webinar and you can join me every week to do this in person live with new properties every week so hope you guys can make it and I will see you around the site have a great day bye
