Ashley:
How do you value extra bedrooms when comps just don’t match? Is finding a mentor really essential? And should you get your real estate license or is that just another distraction?
Tony:
Today we’re breaking down three key questions from rookie investors just like you.
Ashley:
This is the Real Estate Rookie podcast. I am Ashley Kehr,
Tony:
And I am Tony j Robinson. And with that, let’s get into today’s first question. So our first question today comes from Richard. Richard says, I’m looking to do a burr in a market that I’m not very familiar with, actually not familiar with this market at all. The person I’m doing it with brings a lot of value and they have resources in that market that will make this cool. Comps are an issue though because there are really no comps of similar properties. The property is a five bedroom, two bath, but it’s only 2300 square feet, whereas most of the five bedrooms in this area are 3,200 to 4,000 plus square feet. This is more so the size of a three two. So here’s the question. When evaluating after repair value, if we have a three bed and a five bed of similar size building condition, how much value do we give to the extra bedrooms for the five bedroom when the square footage is about the same as a three bed, I’ve seen articles with arbitrary numbers like 10 or 20 K.
Tony:
Does anyone have any ideas? Thanks. So I think before we dive into this, it is a very real question that I think a lot of investors struggle with is trying to make sure you nail down your comps to get your A RV. But let’s just describe first what a RV or after repair value is. So your after repair value or a RV is the value of the property after you’ve completed whatever renovations you plan to complete. So typically if you’re flipping a home or if you’re refinancing plans refinance, you buy a distressed property, right? A property that’s in disrepair, you invest money to fix it up. And in the process of fixing that property up,…