is it worth it or too expensive for a rental?

Question

Hi all,

THere's a property that popped up on MLS today in the dfw area. Owner is asking for 60K. City says the value is 90K for 2016. It has  foundation issues. house also needs carpet, kitchen, bathrooms, flooring, paint...

I'm looking for a rental.

what would be a fair offer for something like this?

Andrew Johnson · Answer

@George Genovezos You can mess around with Zillow and other resources like that but personally I think their estimates skew high so it can be misleading.  What you really want to do is figure out comps from sold properties (not listed properties) in the area.  In the world of subdivisions it's easier because you can find model-matches.  If it's a custom home, in a rural area, etc. that's where appraisers come into play.  Anyway, you can use the Zillow's of the world as an "educated guess" but keep in mind that it's best viewed as a guess (my personal opinion).

Andy Webb · Answer

@George Genovezos - do you have a realtor that can help you with a CMA (comparative market analysis)?  There is no central database for market value for any given property - the value of any given property will continually change based on the latest sales that transpire around it.  You have to look at the most recent sales of similar properties (size, age, condition, etc) in the immediate area to figure your value.  In your case, this property will most likely need renovations, so you want to look at properties that are comparable to your finished product.

I have some rentals in the area and without knowing the specific location, $60k sounds good for Bedford (depends of course on how much money you have to sink into repairs...).

Andy

Scott MacArthur · Answer

What do you mean by the city says it's value is 90K/  Are you referring to the County's Tax Assessment value?  If so, I wouldn't go off of that for value.  If you need sales and rental comparables let me know and I can send them to you.

Scott MacArthur · Answer

Message me the address and I will run a rental and value analysis for you but you will need to estimate repairs.  Foundation problems can be simple or complex and cost to repair will vary greatly.  Is it slab or pier and beam?

John D. · Answer

@George Genovezos get a pro to give you an estimate on what its going to cost to get it into rentable condition.  For example...if its $30K, you will be $90K all in and if you're planning on flipping...and comps are really $140K, you could POTENTIALLY make around $40K-$45K .

George Genovezos · Answer

thanks @andy w.

No I don't have a realtor that can provide a CMA. Will Zillow or similar have what I'm looking for?

If it was in Bedford, I would see the value. This place was in Arlington. Rehabing the place would have made it the best place on the block. Definitely a d  neighborhood.

I'm trying to figure out what I should offer for something similar if I run into a similar situation.

So to recap, seller is asking for 60k, needs a ton of work. Tad says it's worth 90. Zillow comps say 140.

If that was all the info you had, what would you offer

George Genovezos · Answer

Thanks @Andrew Johnson

Is there a base calculation for ARV. I understand everything is local, but I'm wondering if there is a central repository or something

is it worth it or too expensive for a rental?

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