Appraiser v. Property Manager 24 posts by 8 users

Posted: 03/18/2008 at 03:05AM

I really love real estate, I've been studying and looking at REI books for a good 5 years, and I like the prospect of working in the business. After some reflection I've decided on two jobs that I think would be beneficial. I like appraisal the as a job the most, as I believe it allows me more freedom, to work in a self-employed capacity. I'm not really very fond of working for other people, and I like to take " fish" so to speak. I've also come to the realization that in order to get rich, you can never buy anything at retail, and have to becoming adept at recognizing undervalued assests. I think appraising offers me the best oppurtunity to do this. However, property management is the nuts and bolts of the business, the actual management of a real property can perhaps be priceless. What would an experienced investor assert is more beneficial to a REI career?

Posted: 03/18/2008 at 09:32PM

Ok, you're in Indiana. I don't think I've ever had a desire to get an appraisal yet on an Indiana property. Appraisals here are worth just a hair above jack friggin' squat. Is the property cashflowing? If it is, you will win. If it isn't, you will lose. How do you keep a property cashflowing? Buy it cheap and manage it right. You can buy in this state where the monthly rent is upwards of 4-5% of the purchase price. Doesn't take a brain surgeon to make those work. The key is good management.

So....which would I suggest? Management without a doubt.

Whichever way you go - I know people who work in both careers and all of them keep telling me they can't wait to get out of them....lol

Posted: 03/22/2008 at 08:46PM

it is my understanding right now that once you complete the USPAP for your trainee license, that it is next to impossible to get a licensed appraiser to take you on given the general real estate market today.

Amen to that lord knows I tried!

Posted: 03/23/2008 at 11:47PM

" so I say be a full time real estate investor and flip"

Honestly....easier said than done in a state where cities are predominantly 66% non-owner occupied housing. Your best chance for flipping in Indiana is flipping rental property which you must manage to show them as a performing asset or flipping through lease option (land contracts here) which you must manage until you get a tenant who qualifies for financing.

Posted: 03/24/2008 at 05:00PM

A lot of the smaller ones too. It's actually not the first place I've seen like this - saw it in southwest Missouri too. Lot of renters in this state - very good place to be starting out.

Posted: 03/24/2008 at 08:29PM

It's a great state to be in the temporary industrial staffing business too....for much the same reason.

But be careful - even though these numbers apply predominantly to the state, as with anything you must not assume a blanket number for the entire state applies to EVERY place there. For example I really don't bother with Hammond anymore. Each city is a market unto itself with it's own plusses and minuses and must be analyzed individually.

Posted: 03/24/2008 at 10:26PM

As I said, in the context of investing in rental property in Indiana - I don't need appraisals. When you're buying property for $9,000-$14,000 a unit after repairs and it rents for $500-800 a unit, if you can't figure out that it works without an appraisal....then I can't help you.

Posted: 03/25/2008 at 10:07PM

loki005

Annual cash flow / cost (or value) = Capitalization Rate. In Tim's case
his cap would be in the range of 66%. Rent $ 500 per mo = $ 6000
per year $ 6000 / $ 9000 cost ( or value ) = 66% cap rate. How ever you must calculate Tim's cost to carry the unit. Taxes, insurance, debt service
vacancy rate, repairs, mantaince, utility bills ( a vacant unit in Indiana
needs heated in the winter to prevent damage). Managment, even if Tim manage's his own units his time is still worth money. Cap rates are very good tools to use when a broker is selling a property but when diceted
the NOI appears. NOI is a much better indicator of value. I also live and
work in an area were homes can be bought for 5, 10 , 15 thousand and
I do buy them and they do produce well. I will even trow in that since I am a licensed broker at closing I walk away with a commission usually
a $ 2500 dollar minimum. So I do get some property for as low as
$ 2500 that with some paint and carpet are rentable. The only problem with low end units is low end appreciation and low end tennents. If you go over board fixing them they become over improved for the neighborhood. In the long run don't allow yourself to be fooled by cap rates they can be manuiplated. Best to go with NOI, best to buy higher end real estate and keep then you will see good appreciation and qulity
tennets.

Posted: 03/26/2008 at 08:35AM

I didn't even have to let her know how I came up with that 20% + cap rate theory (LOL). You see Barbera we as full time investors all ways (and I mean all the time) input the worst case, we never go by are best profits. If everyone did that than would hit the fan and a lot of people would be unhappy, for example.

Promise an investor 25% on their money and they only profit 19% they just might throw you out the bus.

But if you originally promised them 15% and came up with that 19% then you look like the hero and everyone is happy.

Thanks again Jon

Posted: 03/26/2008 at 09:57PM

Check your state regulations. I think in most places, you do have to work for a couple of years under a broker. That's the case here in CO. There are some brokerages that will do it for a minimal fee.

Jon