Real Estate Investor · Myrtle creek , OR · Member since 2008 · 343 posts · 13 votes
I've found two properties within a block of each other. One is a 3bd. 2 ba. 1055 sq. ft.built in 1921, completely remodeled 8 mo.ago, new roof, vinyl siding and windows, hot water tank, kitchen, bath. carpets, paint, etc.currently leased for $650.00 mo. price 35,000 tax appraisal 23,000. Property number two is a 3bd. 1ba. 1,320 sq. ft. built in 1994, needs about 1,000 in cosmetic repairs, currently leased for $700.00 mo. price $37,500 tax appraisal 31,600 I can only purchase one, which do you feel is a better deal and why? Jim
You need to know the market value for these properties in order to make an informed evaluation. The tax value is not normally the market value. In this case, if the tax value was the market value, you would be upside down (have negative equity) on both of these properties. Paying more than market value for a property would be crazy in the rental business.
Based strictly on cash flow, here is how I would evaluate these deals: