Paying too much even if the numbers make sense?

[Evan Appleton]

I've been doing a bunch of research and analyzing like crazy. It seems to me that people mostly focus on the cash flow of small multifamily investments, which I understand. When I analyze properties that are appraised at around 130k but are asking 300k, the impression I get is that people are ok with paying well above the actual appraisal value because the property is income producing. Am I right? I could understand how you would pay a high price as long as the rest of the numbers make sense but I also don't want to fall for something dumb and pay to much right out of the gate.

[Charlie MacPherson]

Be sure you're differentiating appraisal and assessments.  Here in MA, we are theoretically at 100% valuation, meaning that properties are assessed at 100% of market value.

In practice, it never works out that way.  Assessments are nearly always FAR below the actual market value.  Of course, appraisals are almost always a better estimate of real market value.

Whether TX works the same way is something you have to determine.

You're only over-paying if the numbers don't work, right?