Assessing the market value of a house
I'm looking to purchase a turn key single family rental property what are the best tools to determine the market value to assure I'm getting the best deal
Utilizing an agent is always a great idea, as is getting an appraisal. Always review comps first before expending money under contract or for an appraisal etc as turn key providers can sometimes be dishonest in their valuations in my experience.
You can ask your provider for the comparable sales they used to determine the market value of the property. You can ask an independent real estate agent for a Market analysis (CMA). If you are planning to finance the property the bank will request an appraisal so if the property doesn't appraise then you can back out (assuming you have that as a contingency).
One way the TK provider get you is by selling you at a higher price than the markets. They are the experts in this market so they know what the property will appraise at. As an investor you are focusing on the return. The cash on cash return looks good at that point because they are assuming that you will get 75% of the price of the property. When the bank appraises the property the value may be lower and the TK provider will pressure the investor to put more cash in the deal. As an investor the cash on cash return is not the same anymore so you need to reevaluate if it meets your investment criteria.
Thank you for the responses they have been very helpful, in this situation it would be seller financing for the first year then a refinance after the first year so there wouldn't be a real estate agent involved in the transaction. It sounds like the best course of action would be to do the CMA myself would you agree?