Rental Property Investor · TX · Member since 2023 · 4 posts · 2 votes
Hello there!
I am looking for an investment property to buy. I am finding some distressed houses. If my offer is accepted, what to look for to ensure the home is valued at the asking price? Do I need to get an appraisal?
This is why you need to work with a realtor to make sure you are not over paying for properties. They will be able to run what is called a CMA and tell you what the properties after repair value is. Make sure you were buying significantly under that.
@Flor Park, many if not most distressed properties are bought in cash. In those cases you yourself determine the value BEFORE you make an offer.
Often no appraiser is involved and even for an investor the value of the property is NOT important! What is important is the ARV (After Repair Value). The value after you rehab the property because then you will either flip/sell or rent and refinance. So, you need to estimate that value up front as well as the rehab costs and factor all of that in when you purchase.
So, the value of the house as it stands in a distressed condition isn't as important as what you will be doing with that property and what the value will be when its done.
If you will be using financing to make the initial purchase, an appraisal will of course be part of the loan process though.
With questions like this, I suggest you get a real estate agent to represent you even if you are looking to purchase off-market.
This is why you need to work with a realtor to make sure you are not over paying for properties. They will be able to run what is called a CMA and tell you what the properties after repair value is. Make sure you were buying significantly under that.
@Flor Park, many if not most distressed properties are bought in cash. In those cases you yourself determine the value BEFORE you make an offer.
Often no appraiser is involved and even for an investor the value of the property is NOT important! What is important is the ARV (After Repair Value). The value after you rehab the property because then you will either flip/sell or rent and refinance. So, you need to estimate that value up front as well as the rehab costs and factor all of that in when you purchase.
So, the value of the house as it stands in a distressed condition isn't as important as what you will be doing with that property and what the value will be when its done.
If you will be using financing to make the initial purchase, an appraisal will of course be part of the loan process though.
With questions like this, I suggest you get a real estate agent to represent you even if you are looking to purchase off-market.
Your input is greatly appreciated. Thank you for taking the time to share your insights with me.
If you are looking for distressed, you need to know what the market value range could be once you "un-destress it". Once you have that value in mind you need to calculate what how much it would take to get there so you can arrive at your fair value, which may not align with the seller so negotiation comes into play.