All Forum Posts by: Mike K.

 Thanks for the input.  We have a milder climate down here in Columbus, so $300 sounds about right based on your experience. 

Hillary I'm in the process of getting a HELOC. I talked to several lenders and Citizens Bank had the best terms - 8.15% with no origination fees. Many of the lenders quoted me over 9% with origination fees. Best of Luck.

I'm looking at a older 2 story duplex with a unit on each level.  Property is priced right and there is a positive cash flow with an estimated $300/mo utility cost.  My concern is there are window AC units which could result in much higher electric bills in the summer.  Would you consider a rental duplex that doesn't have split utilities?  If so how much of a price discount would it take to account for the utility costs?  Any input would be greatly appreciated. 

 The accuracy of the appraisal depends on the quantity and quality of market data available. If you are in an active market with many recent sales of 2-4 units homes the appraiser will be able to find a few highly similar properties that have recently sold that are highly reliable indicators of value. If not then the appraiser has to use sales of less similar properties in the same area, or find sales from a similar neighborhood and make adjustments which lowers the credibility of the valuation. Unfortunately right now there are not a lot of sales of residential properties in many markets.  Appraiser should also be looking at active listngs and consider how long properties are listed before selling (DOM) and what the sale price to list price ratio is. 

 Bob, where can I attend your seminar.....

Michael Smythe, thanks for the input, much appreciated. I've been in the home valuation business for 30 years, so I'm highly proficient at using the MLS and County Records nationwide. Back in the day before the catastrophic housing crash I noticed the DOM rapidly rising in Detroit. I convinced the powers that be at my Subprime Lender employer to stop making loans in Michigan about a year before the $hit hit the fan.

I took a look at some of the completed Sheriffs Auctions in Columbus and the surrounding counties. I did notice that most of the completed sales sold well above the min bid, except for the low priced ones. Many of them sold too close to market value for the risk involved. Seems like there may be too much investment capital chasing too few distressed properties at this time.   

Most of my kids are now out of the nest and I'm finally in a position to start investing in RE.  Trying to find the right strategy before jumping in the water.  Seems like the biggest challenge right now is finding a property that fits the criteria without another investor grabbing it first. I have a strategy I'm looking at, but I'm hesitant to post it. 

Wow, that's quite a modern design. I won't have thought Newark was so trendy...

Yes, I have looked at hundreds of appraisals of 2-4 units. That's what I do for a living, for the past 25 years. I've even completed a few of them myself. I'm very familiar with Fannie and Freddie guidelines and USPAP. Bottom line - It's up to the appraiser to decide which valuation approach to hang his hat on, regardless of the GSE guidelines.

 Costs per square foot is not a great metric because is depends on the price tier and market area you are and what quality of fixtures and finishes is expected by the buyer.

Usually residential properties up to 4 units are valued by residential appraisers.  5+ units is considered commercial. At all the lenders I have worked for a 4 Unit would be assigned to a residential appraiser. It's up to the appraiser how much consideration to give to the Income Approach to value versus the Sales Comparison Approach commonly used for single family homes. They will typically complete both approaches on a 2-4 Unit.