In this video, Shawn Tiberio takes us through his "Arts and Crafts" house and talks about how he got creative with the comps on this property to increase his profits.
This "Arts and Crafts" property was picked up remotely by Shawn and his business partner on the ground in Alabama.
The property has a lot of great features already and many elements that he is able to re-use, like a metal roof, a newer fence around the majority of the property, and a few other big ticket items that don't need to be replaced.
It's important to go into every property and not assume that you will have to replace or update everything in the property. You only need to replace what is needed to get the property to market condition to sell. With this particular property, Shawn was able to replace only a potion of the fence, instead of the whole thing, to save money.
After looking at the comps for the property in its as-is condition, he decided to pull some rough comps in different price ranges. This helped him determine whether or not there were any additions to the property that he could make to bump up the ARV to the next level.
This is a great strategy to create additional value in a property by making improvements that increase your profits.
For example, if you have a 3 bedroom, 2 bathroom single family property and are looking for comps in that range, you could look at 4 bedroom, 3 bathroom properties in the area and see if, financially, it would make sense to add a bedroom and/or a bathroom.
In the end, the comps dictate what work you will or will not do to a property. If you want to add a bathroom, which will cost $4,000, but will only add $5,000 in value, it might not be worth the added time and money. At $10,000 increased value, it would be something worth considering.
Shawn created a higher ARV for the property by going through this exercise.
(Check out Shawn's article on how to find and manage great contractors)
Above and Beyond Properties
San Diego, CA
Terms used in this video:
- After Repair Value (ARV)
- Walk Out Basement
Features mentioned in this video:
Key take aways:
- Repurpose as much as you can, roof, fence, etc. Don't replace simply to replace.
- Clear out landscaping to make smaller lots seem larger
- Leverage yard signs and Moby for continuous marketing during rehabs
- Open floor plans are in right now and are highly desired by buyers
- Enhance certain features to line up with the price range you are targeting
- Tape your Scope of Work to the windows throughout the house
- When estimating, don't just look as-is comps, but look for opportunities to add to bring it to a new price range (i.e. add a bathroom, or bedroom)
- Finished walk out basements add to the marketable square footage of a home
- Your initial walk through repair estimate won't always be what your actual is after you get it under contract