All Forum Posts by: David Greyshock

I'm sure there will always be some variation in market value vs asking price. But some of the quoted after repair values have been many thousands over the market which was why I asked the question.  The replies here have been very informative for sure.  I also agree with the above post related to the added value of not having major repairs because everything is new.  I'm surprised that appraisals for SFRS are approached a little differently if they are an investment.

Wayne Brooks- I am not trying to talk myself into over paying.  I come from stock market investing where hard and fast rules are the norm.  My question was more along the lines of why the big ticket stuff isn't taken into account during an appraisal.  I would think that they would be of less value to a homeowner than an investor, but for the gap to be so large between a newly renovated property and one that needs significant capex (and isn't marketed to investors) to be so large is a bit of a head scratcher.  

Perhaps I've spent too much time analyzing multi-family properties.........

Steve-I totally agree about spreading risk; my wife and I are looking at investing in multiple cities across the country for that exact reason.  We have been searching for properties that fit our criteria and it's no skin off my back to walk away from something that doesn't fit.  I'm just surprised that since turnkey is becoming more mainstream (or has been for a while) that complete renovations seem like a waste.

Yes I have considered the fact that the seller has the home overpriced, but my question is: Do they really? Whether an investor would be willing to pay over market value for a property is entirely up to them. Factors included would be if they could fetch a higher rental rate, if they would avoid Capex in the next 10 years, if it would make a difference with a lease option.......

Appraisals use comps for SFRs and that is the standard , however, I wonder if a SFR that has been completely renovated can be truly compared with one that has not had anything done to it since it had been built originally.

The issue is that perhaps they are comparing apples to oranges.  If a property has been renovated with completely new "B" class amenities in an older class "B" area , wouldn't that reflect on an appraisal?  That makes sense since it works within the value-add strategy for multifamily properties, i.e. bringing a property up to the current standard.

I wonder; if an appraiser did actually take the level of renovations into account, would it possibly change the local market and cause others to follow suit.

I have been looking at turnkey investment companies lately for out of state investing.  One of the common themes is that there may be a discrepancy between the asking price and the appraised value(possibly higher)  Sometimes, this may push a 20% down payment into a 30-40% down payment because a bank will only lend 80% of the appraised value.  

My question is:

If a turnkey company actually spends a significant amount of money to replace the high ticket items, e.g. AC, furnace, roof, water heater, etc., why wouldn't an appraiser be able to account for that when using comparable sales that haven't had significant capex items done? A house built in 1980 with brand new EVERYTHING should be worth more than the same house with original mechanicals.

If big ticket items are essentially brand new, why shouldn't it be accounted for during the appraisal?

I understand the difference here between SFR and apartments, but still, a higher down payment in these cases may mean the difference between buying 1 SFR and 2.

Hello all. Just joined the forum. I've been doing a ton of research and reading on multifamily properties looking for a way to diversify for retirement. I currently own a mortgage free SFR that cashflows $1800/mo after taxes and insurance. I'm working towards 4-6 units to start but I know there's lots to learn. Look forward to seeing you all out there.