show you the value of all the comps in their completely fixed-up state. Analyzing comparable sales in the area allows you to see what a comparable houses are selling for on price per square foot basis. We don't care about the NUMBER that was paid, but instead, the price per square foot. For example, don't say well houses have sold for $130,000 here...instead look at the DOLLAR amount per square foot that the homes are selling for. This will help you understand and estimate the future value of the property you are analyzing easier. When looking at other properties that have sold recently, pay attention to their finishes... Are the countertops granite? quartz? laminate? Does the house have carpet? tile? LVP? Was the roof replaced last year, 5 years ago, 10 years ago, or this year? Same with the HVAC and hot water heater. These factors matter! Renovations can vary from minor cosmetic fixes to major rehab. Your costs to renovate needs to include materials and labor, and should always take into account your end buyer. For example, if you’re flipping a commercial or rental property, your materials need to be within the span of what’s acceptable for that type of space in that type of market. However, if you’re flipping a residential property, you’ll want to make sure you do some upgrading to make sure you include the features buyers in that area are looking for. So for example for a residential property: if the comps that are selling have quartz and LVP you must compare it to the property you are analyzing. If the subject property has laminate countertops and carpet throughout, then you know that you will have to spend X number on updated the countertops and X number to put LVP throughout the house to bring it up to maximum value for that area.
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