All Forum Posts by: Nick Yates

Estimated Value v. Listed price question? We really appreciate all of your help and advice as we dive deep into the world of real estate. We know everyone starts somewhere, but it's definitely something that we're excited about and busy learning every day. The Jacksonville property we are looking at has cash flow that meets our numbers, however the list price is 16K more than the estimated value on valuation documents. That's a big gap. Does these valuations take into consideration upgrade, renos or simply data based on comps in the area? Surely we couldn't offer 88K, what the estimate is saying if the list price is 104K, If the estimate was close to the list price we would be keen to offer 99K. 

On the other side of putting in an offer and when it's accepted. If you then have a appraisal done, is it standard to have an appraisal contingency in the purchase contract and if the appraisal is far less than can you walk away unless the seller is willing to come down? Even if you put in an offer that was much more? 

Thank you advance for any further insight into this! 

Thanks for taking a look @Maxwell Lee. I appreciate your comments seeing as you are an investor based in Jacksonville. Always great to get input from local feet on the ground. We will use this in conjunction with all our research and also look out for further investment opportunities in the area, hopefully with better ROI. These deals often get snapped up quickly hey! Thanks!

Thanks for your comments @Eric La Pratt. Appreciate your time to share your experience.

 Thanks Kyle. My initial question on this was about comparing the cashflow between these two properties. The Jacksonville property is twice the price of the Detroit porperty with very similar numbers / returns. But ultimately we would have to invest twice the price to get the same numbers and this is my question to the community. Is this reasonable? What other factors would investors consider in comparing these two properties and numbers?

Hi @Ron Walraven and @Eric La Pratt, yes it is in this area you both are talking about: Mitchelldale Ave. We know that this little area is a part of Ferndale but is straddled between Detroit and Ferndale. Yes I understand what you are saying and have talked about it with the Mrs. It is actually right behind  and shares a fence with Ferndale High School on the western side and just one or two more blocks than a few blocks from Woodward. 

My wife and I discussed this so I am glad some others are talking about this. It is one of those things that this area being on the cusp of Ferndale might be one of those areas that "comes back" or is rejuvenated with fresh investors. We see it happen with pockets of areas all over the country. This was part of our thinking and calculations. 

Ron, by looking at these numbers, this wouldn't be typical of Ferndale?

Thanks for your comments @Maxwell Lee. These were our thoughts but it is good to hear others have similar opinions. There are lots of people saying that Detroit will bounce back and many predict sooner than later. 

Let me ask you a follow up question, if I may, seeing as you are a Jacksonville investor. What sort of ROI numbers are investors looking for in properties? I know it comes down to their investment goals. We are looking primarily for cashflow at first but see property appreciation as a close secondary goal. Do the numbers I posted above indicate a property worth considering in Jacksonville? Cheers for any further opinions you have on this.

 Hey Kyle, thanks for asking! All numbers are worked out to the best that I can!

Ferndale Michigan:

Price-to-rent: 17.5%

Cash-on-cash: 30.8%

Gross yield: 17.45%

Monthly cashflow: $353

Jacksonville, FL

Price-to-rent: 13%

Cash-on-cash: 16.9%

Gross yield: 12.9%

Monthly cashflow: $366

What are your thoughts on the numbers? (I am trying to be objective and look at the numbers. My wife sometimes get caught up looking at the photos! It is certainly a balance between the two)

 G'day Toby and I totally understand you on this one. We are concerned about this as well. If the property doesn't have good tenant applications we may have to let it sit vacant until the right one comes along. Or change the property manager. 

Your comment about being close to the property is interesting and I hear both sides of this a lot. Some advocate for buying so that you can drive past it once every couple of months. Some say buy any property in any city that meets your criteria and gives acceptable returns. I suppose we are trying to work this out for us and working out that criteria too. 

Hey @John Thedford, Those are some definite perks of Florida. We currently live in a very very warm place and want to only see snow on the TV and when snowboarding!