All Forum Posts by: Bill Patterson

I always require tax returns and actual income / expense vacancy for 2-3 years and do comparisons to get an idea of trends. Is the expense low because of deferred maintenance? Is it high because owners were catching up on deferred maintenance to either sell or improve vacancy rate? Are utilities included in the rent? There are many variables in the income expense ratio calculations that can affect the actual number. Many good investments don't fit the rules of thumb! These "rules" are just for a first glance and even if they are out of whack, you find the property desirable and potentially something you would want in your portfolio, dig into it. It takes time, effort and due diligence to get the good ones! Of course for the SFR investor, you may not have the tax returns or income/expense info, but this is what you need to create from current, realistic or actual costs and income projections.
Bill

Kim, I'd look at both of them to get an idea of the market trend over a period of time, but would depend on current market data to get an idea of value now, Current, comparable sold property data is what you need and the listing Realtor or your Realtor should be able to provide this information for you. Good luck with this and welcome to BP! Bill

Hi Kim! Assessed value is a value placed on the property for tax assessing purposes and here in Michigan is set at 50% of market value. The problem is that it is based on old data and usually lags by at least a year as far as value goes. Also, the reliability of that value is often challenged, since most of the time each individual home is not evaluated, but neighborhoods are looked at in general.

When an appraiser does an appraisal, they use current comparable properties sales data to come up with a value. Also, when appraising multi-family income producing property, they will factor in replacement cost and income.
The key thing here is that the data is usually much more current and the appraisal is specifically on the subject home.

Bottom line....the assessor's value is a guideline, an appraised value is what the lender will depend on and you will need to run your own numbers to see if it will work for an investment for you! You are on the right real estate site to help with that determination!
Bill

Congratulations Charles on BP Member of The Week! It's great to have the advice and input from a CPA that is also an experienced investor. No textbook from you, just sound advice!
Bill

HVCC is just a misguided, government effort to reform the sometimes sloppy or even corrupt appraisal business, that helped cause the housing market melt down. My thought as an investor and a Realtor, is that if you didn't need one before HVCC, you don't need one now. If you needed one then, you probably do now. Except in your case! If you have the time to market your properties now and FSBO sign will get lots of action, and you can make $$$. Go for it! The way we structure our short sale business, we need Realtors and for our condo sales, although we list them on the MLS, most of our sales are through our own marketing. When buyers have a house to sell first, we refer them to a trusted Realtor so that we can best spend our time doing our own business.
Bill

Success is something that I always seem to get to some degree. Even if it is a "lesson"! My plumbing contracting business was a success since I was always busy, made a great income and never had to advertize, just repeat customers and referrals. My student rental business allowed me to retire early, until I became restless, sold out to my partner and moved to restaurants. We completed our 5 year plan in 4 years and made lots of $$$. Then, as a contractor / developer, my wife and I started a 78 unit condo project just before the economic - housing downfall. Although our 5-6 year sell out has been revised to add another 5 years, we consider it a success! We have a long list of potential buyers waiting to sell their homes to buy. We build Energy Star 5+ and Green Built Certified. We have changed the condo market in our area in a positive way. Still, we are happy and love what we are doing. We just would like to sell more condos, faster! Until then (and beyond) we are doing the short sale buy/sell. We still love what we are doing and are happy but, we needed to change our business focus to match the economic realities and investment opportunities. Now, as we were ready to leave our weekly condo open house at our model home/office, another potential buyer came late, causing Jackie to go show a spec that we have and giving me time to answer this post! It is a good thing that we love what we do and working together because we sure spend a lot of time doing it!
Yep! We’re successful!
Bill

HVCC has been in force for over a year now and although the appraisal industry had lots of problems, HVCC has added another layer of problems for home appraising and selling. I have seen hundreds of discussions voicing frustration! I don't think that these rules cover BPOs (thank goodness), but Tom's story is one that I have heard before. I would think that the lender should soon find out that they are getting an inaccurate valuation and get another BPO agent out to reassess the property. All you can do is submit your own CMA or BPO along with needed repairs and estimates and hope for the best. It may take time, but persistence and CMAs over a period of time will hopefully make the deal work.
Bill

I agree with most of what Bill (Financexaniner) says, but do think that a home equity loan can be a good short term solution until your Mom decides what she wants to do with the house. The costs are very low, it is quick and easy and it will resolve the property settlement quickly. Why invest in a 30 year mortgage if she decides to sell in a year?
Bill

Jon has good advice on this one. I'd rather do maintenance on one central condensing unit than several window units. Also the cost of operation is less for a central unit @240 volts than for several 120v units. In Michigan, the window units should be removed for winter to stop the "ccccold" from coming in!

I agree with Vikram. You need a passion for what you do to be successful. If you need to have motivational materials to keep your interest and drive, it may be time for a new venture. As for as goals go....I basically make a plan. I guess you can call it a goal, but it is really more of a plan so that I can make adjustments if things are not going as I had planned. My goal is basic...do the best that I can with any venture that I take on!