Appraisal Value vs, Real Value

[Mark Turner]

Hi, I'm new here as a poster, but a frequent reader of the posts and newsletter. A great place for information.

I am looking at a property that potentially looks like a good opportunity if the price is right. However, the the sell price is significantly over the current town assessment (here in NY assessments are annual and at 100%). So, I must consider that when seeking financing.

My question is simple...when evaluating a investment purchase...how do you handle the current assessment in your evaluation?

[Will Barnard]

For a buy and hold, you should be paying more attention to the cash flow and rent to acquisition price ratio. That will be a better scale of the value.
Assuming that 50% of the gross monthly rents go to all expenses and the other 50% remaining is for debt service and cash flow, how much cash flow do you have? Then take that cash flow (annual) and divide by the cash invested and you get your annual cash on cash return. If that % meets your goals, you have bought at the right price. If not, offer less.

All the stuff about tax assessments and appraisals are less relevant.