My wife's uncle has 2 property's, right next to each other. He has his main home on one piece of property, and a small house that he rarely rents out on the other one. It's a tiny house on brick foundation with 1 bathroom, small living room (10x10) and 2 tiny rooms.
Me & my wife have been discussing that this may be a good piece of investment to purchase, since that area is starting to develop fast; ie: building alot of new subdivisions within miles of that home. He pays in property taxes 700 a year, and interest about 150 a year.... I'm not sure whats left on the mortgage, if anything at all.
If we do plan to get that house, our plans would be to get a large loan and either level out that house and start over from scratch, or keep the land and wait to see what happens in the future.
Here's my question: HOW or where can we research to see if it would be in our good judgement to further proceed into talking to him about buying it off of him, and also how can we figure out what a good price would be (in our favor of course) Ive seen what the "just mkt value" on the county's property appraiser site, it says 33K. On zestimate its around 75K for that property....
i think it would be good to research the area...if like you said the area is rapidly developing.....then it may be a good buy...some things to think about....is it in the city or the suburbs....why is the new developement happening? Is the area appreciating....how does the county appraise it?
You have to be really careful with using Zestimate for valuation. Zillow has a page that rates their accuracy state to state, because their "estimates" are based on their access to information. Some states don't provide enough sales info to be accurate. I do lots of deals in Texas and Zillow and all other "instant" valuation sources are so out of whack, if I did deals based on their numbers I'd lose my shirt.
Another challenge with "instant valuations" is that they don't consider model comps. This is where your house is an 800 square foot bungalow built in 1960 and it is compared with a 1400 square foot 2 storey built in 1990. With an actual professional appraisal that comp is completely invalid.
I would call an appraiser and get an opinion. Some will give you an estimate for free in hopes of getting the appraisal business, or I sometimes pay $200 for a "drive by - After-Repaired-Value" appraisal.
Also, I would do some research on rental values in the area. How much will it rent for. Why would you bull-doze it if you can get revenues until you decide to re-purpose it?
I think it would be good to talk to him about it and tell him what you are thinking of. Mention that you may be interested in the property and see where he thinks the value is. You may find that you are wasting your time and you may find that you can get it much cheaper than you'd planned. Either way you save yourself a lot of work researching values.