Flipper/Rehabber · Member since 2018 · 13 posts · 3 votes
I'm talking with the person who has a house assessed at 400,000. But he added a couple more bedrooms and bathrooms and according to him is probably worth realistically worth 500,000. He would like to sell for around 400,000, but the thing is that he would like to rent the house for another two years while building another house across the street. I didn't know if this would be good for an investor to buy or not. Is it a good thing that there's already a for-sure renter? I don't know if it's good or not that it's not assessed correctly. Thoughts?
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
7y
When you say “assessed” do you mean “appraised” as in a professional appraisal? Or do you actually mean assessed, as in that’s what it’s assessed by the county tax assessor’s office?
Two very different things and could be two very different values. The tax assessed value where I’m at (and in many areas) is almost meaningless. The county assessor doesn’t know the condition of the home and in some states (like mine) the assessed value is actually limited by law how much it can go up per year.
On the other hand, an appraised value (especially if it’s recent) should be much more accurate and, if that’s what you’re referring to, I’d question why you’d believe the owner when he tells you not to go by that and that it’s actually worth $100k more.
A lot of times adding bedrooms or things like that doesn’t add as much value as one think.
Making a 3 bedroom go to 4 sounds really good, if your trying to increase rent but if you’re trying to sell it, it might hurt you when it gets “appraised” because its an addition.
I'm talking with the person who has a house assessed at 400,000. But he added a couple more bedrooms and bathrooms and according to him is probably worth realistically worth 500,000. He would like to sell for around 400,000, but the thing is that he would like to rent the house for another two years while building another house across the street. I didn't know if this would be good for an investor to buy or not. Is it a good thing that there's already a for-sure renter? I don't know if it's good or not that it's not assessed correctly. Thoughts?
he is not ready to sell, he hinted at 2 years wait time.
I would work the comps in the area, and also see what the appraisal is. owners have an emotional attachment to their homes.
Rental Property Investor · Shakopee, MN · Member since 2015 · 985 posts · 374 votes
7y
Never ever take what the owner says is the assessed value. Always use a professional or get comps. Just because he says it's worth X doesn't mean it's worth it. Sometimes people will fluff things into the deal to try and make it look better than it is. I have personally seen this backfire when the real appraisal came in much much lower.
So many missing pieces to this puzzles. Comps from similar homes, market rent, etc.