Real Estate Investor · Tyler, TX · Member since 2009 · 36 posts · 3 votes
hey all..im very very new to wholesaling..still doing my homework so forgive me if im a lil naive but yesterday i came across a home online (realtor.com) and the asking price is $6,000. It is a 3 bdr/ 1 bath home w/basement 1246 sqft....the 2009 appraised value is $33,500. ...so im thinking this is a pretty good deal to try and make some money off of...but after reading some on this forum and some other articles -- i honestly dont know, lol. my question is if this were a good deal why is it still on the market and ive seen it listed on realtor.com plus another site..i know lots of others had to have seen it too...wouldnt some investor have already picked up on it?
Also one more thing...I tried looking this up online but couldnt really get an answer..what exactly is the tax appraisal value? is that what it is worth as of now in the condition its in? and what is an assessed value?
I'd check out the neighborhood - I'm guessing there are many other properties available for rock-bottom prices like this. No matter what it's appraised for, the real value is what it will SELL for. If nothing is selling because everyone is trying to sell and nobody is buying in that area, even a free house can be a bad deal in a blighted area.
If you can get searchable MLS access through a local realtor, you'll be able to see recent sales in the area and do this kind of research yourself.
Assessments are usually for tax purposes and based on recent sales and such. Appraisals are often ordered by banks in order to make sure they are not issuing too much mortgage on a property. They should be close to each other ideally but both may be way off base as well. Again, whether it's houses or hamburgers, the real value is what you can sell it for...
It can be a good deal or not, only depending on rehab costs, possible back taxes and liens on it.
If you can take a online seek with countys property database you find out which sales prices for houses gave in the area and you find the last transfer from the house + any possible back taxes.
A 6k house most likely needs a significant amount of work to get it rent ready, depending on where it is. The value you were looking at is the tax assessor's valuation of the property for tax purposes. Those numbers should not be relied on. You would want to get recent sales comps (last three months) as well as what similar homes are bing listed for. This will give you a pretty good idea of what the house is worth.
Assuming the 35k number is accurate for value, you would want to make sure your end buyer is getting the property at 70% ARV including repairs, original purchase, your fee, etc. That would be 24.5k all in. If you are buying it for 6k that leaves 18.5k to repair it and make your money. That could be pretty tight. It really depends on how much it will cost to rehab.
Well..i personally know the neighborhood and it isnt that great .. its considered the bad part of town i guess...ive looked up some other houses that in that area that are going for prices well under 20k .. the appraised value is 33k while the assessed value is 3k..that is a huge difference..what does that mean?
if these houses have been on the market for a little while and arent selling..should i not try my hand at it being a newbie? i dont want to get into something that i cant handle.