All Forum Posts by: Dion DePaoli

Oh, gosh....

Shane, my friend, you don't get to "pick" what comps to use. That is so not how they work. Although some may think like you.

In the value process, you can not skip over comps or ignore comps in any manner. So the "low comps" have to be taken into consideration.

If you got to pick and choose, that would be the opposite of a "Fair" Market Value. As an investor, you always want to be aware of the low side comps, if you exit to a buyer who gets finance, the appraiser will not skip over comps nor will appraisal review allow comps to be skipped.

Then you did the right thing. You offered so you are a nice guy. The tenant likely doesn't have an attorney to begin with and no attorney that you have to worry about is going to hear that story and take on the job.

As the landlord, be the master of your documents. Know them inside and out. They are typed in English and easy to understand. Most tenants don't read and come up with wacky ideas the counter battle is you should read them and know them.

Poor guy, could have had $50 extra dollars for Christmas.

"Legally paying for comps"

Please go fact check that. It is absurd. Sounds like what ever real estate agent you are talking to is trying to take you for a ride.

In order to list a house they should be pulling comps. In order to make a reasonable offer on purchasing a house they should be pulling comps.

Texas, the conservative state that it is, I can't believe they would put a "law" in place for such a thing. I call BS!

There are plenty of houses by railroad tracks in the US. If there are not enough reasons someone would say "yes", it seems you already know what the answer is.

Presumably the previous tenant was required to give notice about moving out. If they didn't comply with this they are in breach of their contract.

The event of you finding a new tenant quickly is not relative to your contract with the previous tenant. The terms and conditions for your agreement with your previous tenant are in that contract. If they breached it, they breached it you do not have an obligation to give anything back.

That being said, it is December and Christmas is around the corner...are you feeling nice or not?

A law suit for what? What are you trying to protect yourself from?

The representations and warranties of you, the seller, are found in your sale contract. If you breach those you are liable.

Sales are considered final, this is why a buyer purchases title insurance. This protects their right to the property from unknown claims sometime into the future.

Depending on what sort of deed you conveyed the property on you will also have an idea of what liability you have. If you are worried about liability ask your real estate attorney or title company about using a special warranty deed.

One caveat to the post. He should be asking for that based on his success of getting you the loan. I wouldn't ask for it up front.

That is reasonable.

You need to look at how bankable your deal is. It is not unreasonable for a commercial loan to cost up to two points again depending on how bankable your deal is.

Mortgage brokers need to make a living too and 1% is not egregious. Paying for a good broker who knows what he is doing is well worth the fee. If you can go to a bank and get the loan, then do so, but if you need the broker because you are not a bankable deal, pay the fee. If it were me, I would have charged at least 2%; as my time is more valuable than $4,600 and let's just assume I know a thing or two about loans.

(subject to the broker being competent and being good)

Yea, not $78,000 but do you know why?

Zoom out twice. The house right around the corner is for sale. It is larger and newer with a price per square foot of $74.00

Subject property at $78,000 is $85.52 psf

Zillow's "Ziestmate" is automated. Not exact. You have to look at the data too.

As you zoom out, you see home prices are all over the price, partially because this is sort rural.

Subject property was built 1968 most of what you see is 1987 and newer with some in 2011.

4722 Chisholm Trl, Weatherford, TX is for sale for $59,900 it is of relative size but is newer by 20 years. PSF = $56.00

328 Surrey Ln, Willow Park, TX is the closest sold property - very far away - and sold for $100,000 on November 9, 2011; PSF = $39.00 it is larger and newer than subject property

208 Westridge Dr, Springtown, TX - next closest sale - April 5, 2011 also larger and newer sold for $76k at $47 PSF

So, the subject property has some issues. It is in the middle of no man's land and surrounded by a high concentration of homes for sale. The sales competition is newer in age and larger in size, many with comparable lots.

The subject PSF will likely range between $30 to $37 PSF.

That puts the value around $30k.

Since the property is so rural, I would consider running a comparion of the above properties and breaking it down by square feet of the lot. This will give you an idea of much the land value is out there. Subject property structure is 912 square feet, which is not much and the lot is less than an acre, so I would presume not too much of a list comes from that. But it would be good for you to know.

If you have been by the property, I would subtract any repair estimates from the $30k number as a basis of offer.

How am I doing? (I drink Miller Lite)

Market Value is the price an asset will trade (sell) in an open competitive environment.

Defined as follows: Market value is the estimated amount for which a property should exchange on the date of valuation between an educated buyer and a reasonably motivated seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without undue influence.

The delineation of "After Repair" or "As Is" technically exists only as jargon amongst REI groups and conversations.

ARV relates the concept that repairs are needed and is suggested to be some future value. As Is relates the concept that no additional repairs are taking place (it also deals with reps and warrants).

Either way, a sale is Market Value at the time it takes place as for each state and point in time the asset has "a" value which a buyer pays and seller sells.

I see folks run after ARV as if it is something that it is not and it gets them into trouble. This stems from quantify what the repair cost actually is. Under that notion a person can "over repair", if you will which does not always translate into higher sale price.

What my syntax was supposed to illustrate is the same concept you have typed.