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Real estate investors -- how do you evaluate property values
Posted on 12/27/19 at 7:21 pm
Posted on 12/27/19 at 7:21 pm
How do you evaluate the FMV for single family homes when you don't have access to MLS?
3
Posted on 12/27/19 at 7:55 pm to TheOcean
Can't imagine it would be that difficult depending on the area
Look at the average sale time from list to close on the houses in that area
Find recent examples of the price per square foot of homes in that same area that sold within a standard deviation of the mean
Obviously would have to compare things like amenities, year built, etc. but I can't fathom it's something you couldn't research within a few hours to build up a spreadsheet to come up with a pretty accurate analysis
Look at the average sale time from list to close on the houses in that area
Find recent examples of the price per square foot of homes in that same area that sold within a standard deviation of the mean
Obviously would have to compare things like amenities, year built, etc. but I can't fathom it's something you couldn't research within a few hours to build up a spreadsheet to come up with a pretty accurate analysis
Posted on 12/27/19 at 8:24 pm to TheOcean
Simple calculation is 3.5-4% YOY appreciation on your basis. Compare that to your area if its wildly off, compared to current listings/comps in your area, you could have an appraisal done on the house.
Or take $/sq for your region as a back of the envelope calculation. Rsesearching listings in your area and see what they are (at least considerable comps). Grab 10 for a solid sample range and calculate the average X your current sq footage.
Or you could just have an appraisal done.
Or take $/sq for your region as a back of the envelope calculation. Rsesearching listings in your area and see what they are (at least considerable comps). Grab 10 for a solid sample range and calculate the average X your current sq footage.
Or you could just have an appraisal done.
Posted on 12/28/19 at 10:16 am to Rendevoustavern
i use a 2% rule.
comparable rents need to be ~2% of buying price
.....which basically limits me to buying only in distressed situations (but almost guarantees profitabiliy)
comparable rents need to be ~2% of buying price
.....which basically limits me to buying only in distressed situations (but almost guarantees profitabiliy)
Posted on 12/28/19 at 10:51 am to mrgreenpants
Yeah, but how do you evaluate the FMV of a potential property you're going to buy?
Posted on 12/28/19 at 8:09 pm to TheOcean
A good realtor that’s only working for the buyer(not the seller too) should be able to give you average price per sq ft for a home in the condition yours is instantly
Things affecting $/sq ft and resell are upgrades or dated home, location(prox to work, church, schools, grocery store), good or bad schools, rentals vs owners in hood, things like this and more
Things affecting $/sq ft and resell are upgrades or dated home, location(prox to work, church, schools, grocery store), good or bad schools, rentals vs owners in hood, things like this and more
Posted on 12/28/19 at 8:43 pm to Little Trump
Home value is a crap shoot. Everyone uses comps but they only get you so far.
Posted on 12/30/19 at 12:54 pm to mrgreenpants
quote:
i use a 2% rule.
comparable rents need to be ~2% of buying price
.....which basically limits me to buying only in distressed situations (but almost guarantees profitabiliy)
I cant imagine where that is feasible. I just sold a rental property that I was collecting about $1k after mortgage and bills, and that didn't come close to meeting that rule.
If your calculating the rent monthly as 2% that's damn hard.
Posted on 12/30/19 at 2:08 pm to TheOcean
For SFR, $350 per bedroom in monthly rent (higher in trendy area, lower in ghetto)
12 months rent= what the property is worth to me, don't care what it's worth to others.
Also you need to make damn sure up front what the taxes are going to be for you, not the previous owner, but you, and without the typical homestead exemption. Deduct this from your 12 month total.
Obviously this method will eliminate tons of potential properties but the ones you do get are going to make you alot of money.
With RE really high right now, not a great time to buy unless you have more money than you know what to do with.
Let the downvotes rain down upon me.
12 months rent= what the property is worth to me, don't care what it's worth to others.
Also you need to make damn sure up front what the taxes are going to be for you, not the previous owner, but you, and without the typical homestead exemption. Deduct this from your 12 month total.
Obviously this method will eliminate tons of potential properties but the ones you do get are going to make you alot of money.
With RE really high right now, not a great time to buy unless you have more money than you know what to do with.
Let the downvotes rain down upon me.
Posted on 1/9/20 at 5:28 am to Jp1LSU
quote:
I cant imagine where that is feasible. I just sold a rental property that I was collecting about $1k after mortgage and bills, and that didn't come close to meeting that rule. If your calculating the rent monthly as 2% that's damn hard.
exactly.
it is supposed to be restrictive.
i was pretty active in the houston area 10-12 years ago last recession.
i'm not from texas..but i moved there bc that is where the opportunity was
i'd buy 3BR 2 car garage foreclosed homes for $55-65k cash.. have a crew clean them up..and have them rented for $1200-1600 2-3 weeks later.
everything was eventually sold within 2-3 years. (actually we till have a couple properties there that family live in)
i had my realtor tell me the what she could rent the house for... i'd have my contractors go take a look and give me a bid.
then offer roughly 50-rent minus cost to replace floors and paint (or whatever)
no inspections..and usually we'd close by end of week.
she'd list them(she'd tell me the FMV).. if we could not sell quickly.. we'd rent for a year or two and put on market again.
a got lucky with a hardworking realtor..
she'd be the one going to these abandoned homes and sending me photos..checking progress of our contractors.
i rely on them pretty heavily... still do.
after a while..banks start to notice you are buying up their REO inventory...
towards the end we'd buy wholesale from a certain bank.
eventually.. deeper pockets started getting involved and it wasnt possible to acquire (in houston) at those prices.
is was a good ride..and frankly i'm proud we put a lot of hardworking families in some good (but at one time ugly) homes..
obviously, i'm not going to invite competitors.. but we are active RE buyers right now(not in houston area obviously)..
slightly different model.. but still following 2% rule
Posted on 1/9/20 at 7:58 am to deeprig9
quote:
12 months rent= what the property is worth to me
This doesn’t sound right.
Posted on 1/9/20 at 8:23 am to FieldEngineer
I think he’s trying to use the quick & dirty gross rent multiplier method. But he left out the multiplier - whatever is appropriate for the area in question.
Gross Annual Rent x Area Factor = Value/Price
It’s good enough if you’re just doing the 1000 foot view of available properties. I wouldn’t buy based solely on that though.
Gross Annual Rent x Area Factor = Value/Price
It’s good enough if you’re just doing the 1000 foot view of available properties. I wouldn’t buy based solely on that though.
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