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Updated over 4 years ago, 07/31/2020
Understanding Forced Appreciation Opportunities
Hey all!
It's been a little difficult finding a multi family unit to house hack that fits my criteria and that falls within my range of my pre-approved loan amount. It seems like the best deals come from properties that would stand to gain from forced appreciation. I guess I have a few questions about this concept.
- Do house hacking deals exist where little to no repairs are required? I've found that any properties that fit my criteria for cash flow and are in an attractive location tend to be scooped up, AND very quickly. I understand this may be due to COVID restricting the supply of houses and driving asking prices up. Southeastern Connecticut might be a tough market to buy in at this time. If that's the case, I can spend more time saving and educating myself!
- In cases where I would be pursing an FHA loan and an opportunity (in the future with some cash reserves) where I can force appreciation, is there a limit as to what a government inspection will allow? I'm assuming the house must be livable, so any of these opportunities must be aesthetic.
- And FINALLY, my biggest question is just how do you determine what these Forced Appreciation Opportunities are? How do you walk into a house and figure that upgrading a certain part of it will return you greater value than the cost? Who figures the ARV? I feel that I could not just walk into a house and start picking apart areas to add value. How can I better educate myself on this topic.
I appreciate any and all responses!