Underwrote a Sun Belt flip on 2021 comp behavior and lost 9k
Bought at 291 in a metro that ran hot through 2021 and 2022. 1,900 square feet, 2004 build, everything sound. Scope 34k of paint, flooring, fixtures, kitchen counters and appliances. ARV I called 372 off six comps averaging 61 days on market.
The comps were right about price and wrong about time, and I read the wrong one carefully.
Listed at 372 on day 51. Seven showings in three weeks. Cut to 362 on day 74. Cut to 351 on day 96. Went under contract day 108 at 348, closed day 137. Carry was 2,050 a month, so 137 days is about 9,350 instead of the 4,100 I budgeted for a 60 day hold.
Final: 291 + 34.6 + 9.35 + 5.2 acquisition closing + 22.4 selling and credits = 362.55 against 348. Down 14.5 on paper, and after a 5k assignment fee I'd already collected on a different deal that I mentally counted against this one, call it 9k out of pocket for six months.
What I got wrong specifically. My six comps were all from a nine month window that ended eight months before I listed. Every one of them sold into a market with less standing inventory than the one I listed into. Active inventory in that submarket had roughly doubled between when those comps closed and when I hit the MLS, and I never looked at active listings at all. I looked at solds and I looked at price per foot and I felt fine.
What I'd do differently: underwrite against active and pending inventory, not just closed comps, and price the hold off current absorption rather than off what days on market was doing a year ago. If there are 40 competing actives and 6 pendings a month, that's a seven month supply and my 60 day plan was fiction from the day I signed.