Keep your comps real close because your end-buyer is very likely going to get a loan on it. Joining Chris Arnold in today’s show is Jamil Damji, real estate investor and co-founder of KeyGlee. Together, they talk about the reasons why you should keep your comps close and use appraiser rules when comping properties. Jamil then discusses some important things to consider when pulling comps the right way, even in just under five minutes!
Wholesaling Quicktip – How to Pull Comps the RIGHT WAY in Under 5 Minutes!
Today on the show is Jamil Damji, real estate investor and co-founder of KeyGlee. In this short but jam-packed episode, he’ll explain why you should keep your comps close and use appraiser rules when comping properties.
When you look at a house, do you look at the satellite?
I want to see what’s around it. I want to see roof colors. I want to see if I can find traffic lines in the street. I’m trying to get a feel for the hood. When I see the satellite, I can see, “Wow.” It looks like a traffic road on the drawing map. When you look at it on satellite, now you realize it’s a freeway. On the little picture map or when it’s the animated map, you say, “That looks like a commercial building next door.” When you look at it on satellite, it’s a junkyard. There is a big difference between a commercial building and a junkyard. That’s going to take off a tremendous amount of more money on the property.
What things am I looking for? I love to keep my comps real close and concentric. Why is that? Because your end buyer is going to very likely get a loan on it. Whether or not they sell it to an end-user who’s going to live in it or if they’re going to refi it to pull money out to keep it as a cashflowing property. Either of them is going to need to have a lender involved. If a lender gets involved in a deal, that means an appraiser is getting involved in the deal, which is why I use appraiser rules when I’m comping my properties. Appraisers won’t go as far out as a mile to find value. They’re going to want to stay a quarter-mile from the property. They’re only going to use properties that are within plus or minus 200 square feet of the subject.
What does that mean? If my subject property is 1,000 square feet, I can only use a comp that’s 800 to 1,200. If I have a 1,400 square foot house, I can’t use that comp because now the dollar per square foot skews out. You can only use comps that are plus or minus 200 square feet. In addition to that, you can only use comps or the houses that are built within plus or minus five years of construction. Why is that? Because different bill generations use different construction materials.
We pulled up one that was built in 1870 next to the house that was built in the last 30 years.
It’s a big difference. It’s a beginner’s mistake and don’t feel bad if you’ve made the error. It’s a normal thing. We don’t know. That rule is going to change in some build generations like between 1890 and 1930. There wasn’t a lot of building going on.
I did the same thing. Did we pull it to 1930?
They’re using the same construction materials. It was the same build generation, but between 1990 and 2010, 2 or 3 different bill generations are in there. You’re saying, “Jamil, that’s only twenty years and you went 30, 40 years and you called it the same.” That’s because we’ve advanced very rapidly in the last little while. You need to understand build generation. That’s why I like the rule of plus or minus five years. Once you get into those older houses, you can start getting a little bit more flexible, but I’m not comparing a 1930 build to a 1950 build. It’s different stuff.
We’re not going two stories versus one. We’re not going multifamily, single-family.
Flat roof to pitched roof. That’s a big one. There was a time when people were building with these flat roofs and then they started doing pitched roofs. There’s a huge difference in installation and energy efficiency. That’s why flat roof properties tend to be worth less than pitched roof properties. In addition to that, I don’t want to ever leave my subdivision. If I’m leaving my subdivision, I can almost guarantee there was different building standards, different builder and different architecture.
If you’re not in alignment with the way that your buyer thinks, you’re not going to sell a lot of deals.
Different floor plans.
You want to stay within the subdivision when possible. What’s a good way to find out because often we can’t see what the subdivision is? It’s tough like, “How am I going to know if this is the same subdivision as that?” If you crossed the major road, you probably left the subdivision. That’s the rule. Don’t cross the major road. Keep your comps tight to that and you should be okay.
You’ve got an address. You satellite view it. What’s next?
I’m going to look around at what’s sold right nearby. I’m not going very far. If your subject property is here and there’s a bunch of newly renovated sales right nearby, but you’re pulling your comp from right over here, that’s gymnastics in my opinion. You’re bending your legs over your head to try to tell a story of value and no one’s going to buy that. When you’ve got better options right nearby, go with those options. You’re trying to understand the way that your buyer is going to look at this with an objective viewpoint because their dollars and cents are on the line. You should be looking at it the same way. If you’re not in alignment with the way that your buyer thinks, you’re not going to sell a lot of deals.
If you’re interested in joining the most proactive group in real estate investing, it is the TTP Program. Go to WholesalingInc.com/ttp. I personally mentor you. You get my cell phone, we text and we call. It’s crazy. It’s bananas, but it’s the truth because I want you to be as successful as possible. I want to work with you and I love you. If you’re interested in that, check it out. Scroll down and keep scrolling. The little scroll thing is tiny because there are so many testimonials. Nobody has more testimonials. If it feels good in your gut, sign up for a call. Until next time, you’re the best.
About Chris Arnold
Chris Arnold is a 15-year Real Estate veteran who has closed over 2500 single-family real estate transactions in the DFW metroplex. Chris is the founder of multiple companies that are managed by a US virtual team, which allows Chris to run his organizations while living in Tulum, Mexico full time. His passion for leaders has led to the creation of Multipliers brotherhood which serves the top 5% of real estate entrepreneurs out of the US. Most recently Chris has launched his REI Radio coaching program. This program is designed to teach real estate investors the marketing stream that everyone knows about but NO ONE is doing!