PLP-072 Where To Find Value: Comping Properties
Running comps is not as easy as it seems. Finding value from a long list of properties can be challenging. As Keith teaches us how to run comps, he gets down on looking at MLS and who you should transact with. He also shares the importance of getting an MLS access, paying an aggregator, realtor, or broker for a comparative market analysis. Keith stresses the need to makes sure that you are getting a true comparable by using a BPO. It is ideal to keep some appraisers at arm’s length to help you out when you are not busy, and suggests using some websites that has good valuator calculator.
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Where To Find Value: Comping Properties
If you're looking to build wealth without banks and outside of Wall Street by utilizing time-tested methods in an ever-changing world like the one that we live in, then you are in the right place. I'm going to be speaking about running comparables on other properties when you're trying to formulate the after repair value or your loan-to-value of a particular deal. I want to run through the best ways and the worst way. You don't have to be a realtor necessarily, but there are certain ways you can run comps and comparables. There are third parties you can reach out to have that done for you. I'm going to run through those lists and give you a couple of ideas at the end as the last case scenario or last resort, but also to get practice and to start looking at things to train your eye on properties. There are a lot of great free web resources out there.
Before we get into all that, I want to mention that for those of us in the United States, it’s Memorial Day. I'd like to honor the men and women who have given their lives for this country. I’m taking a moment and mentioning the significance of Memorial Day. Whether I agree with a war, a president or a reason for the wars has always been irrelevant in my mind. It's all about honoring those people who sacrificed their lives for this country. While I'm on that subject, I'd like to acknowledge those who served and lived and those who are currently serving in the military. My friends like Leon and Scotty Mac because people like you guys served. I was never drafted or forced to serve. For that, I want to say thank you.
Let's get into the nuts and bolts of this episode. How to comp a property? The best way to do it is through the Multiple Listing Service, the MLS. That's the database that all the realtors and real estate brokers have access to. That's how they determine values when they come and get a listing. They use that and it's the best database out there. I wish I owned it because it's updated fairly quickly and you can get a good snapshot. You can drill down into various variables, lot size, square footage, year built, bedrooms, baths, garage and all the stuff. There are a lot of bells and whistles. When you're trying to determine an after repair value for a flip or trying to come up with your loan-to-value on what you feel like the house is worth right now. For example, if it's a rental and it’s got a builder-grade carpet and Home Depot finishings, light fixtures, faucets and whatnot. If it’s got that contractor feel, if it's got that rental house feel, I would comp that lower than somebody who's had the custom woodwork done, the built-ins and the nicer finishings, treatments, crown molding and these things.
MLS is the best way to look at that to get comps and comparables. If you don't have MLS access, you better get a realtor friend. That's all I can say or go get your license. I decided I was going to get my realty license and pay some online. It was $400. However, I found that it was quickly a waste of my time and money because I didn't have the deal flow. I wasn't doing multiple loans a week. I wasn't loaning money to put bread on the table. For me to go and spend all that time and effort,