All Forum Posts by: Phil B.

James Wachob thank you! I will definitely look there and have to attend!!

Appraisers should always take note of what's happened throughout the ownership history. At least in the market where I live, condition is an integral component of a valuation. Sure, people can overspend or upgrade too much to realize a return, and we call this superadequacy (a form of functional obsolescence) or as some call it, law of diminishing returns. A lot of appraisers will look at comps given to them, but they normally have much more access to data than most and data is king in valuations. With this being said, of the comps you gave him/her are the most similar to your subject, then they should be used. I know we've explained why a comp supplied was used or not used. A good appraiser should always want to improve and gain a deeper knowledge in a market. My mentor always told me to listen listen listen to market participants. Nobody knows everything but the more you learn, the more accurate valuation you can provide.

An itemized list with figures usually helps. Our company policy is to always get a list of repairs and cost, including dates of when performed whenever an appraiser goes to an inspection. This will help the appraiser identify areas that have been upgraded, remodeled or repaired. In residential appraisals, this goes to to heart of condition ratings. The ratings go from C1 to C6. A paired sales analysis or multi-linear regression is used to extract a dollar amount for the difference in condition.

I have yet to attend one but will definitely have to! Thank you!

Yes, the investor's I've worked with generally go international. I've heard of some using online services but need to find out the details. I will make some calls this weekend and report back as soon as I find out something

I can ask some investors we've been involved with in your area and find out. How much are you willing to spend?

Do you have a detailed current rent roll? I'd try to get this information so you could not only accurately determine the income per unit, but also find out the vacancy rate. The more historical data you can get, the better you can estimate vacancy. I agree, seems like a low OER (operating expense ratio) for the property type. Is the property self managed since no management fee or on-site management salary is being reported on the expense side? I'd try to tie down the rent rolls, occupancy and above the line expenses. Vacancy and collection loss are very important in either a direct cap or DCF analyses. 

What kind of lending terms are you being quoted? I only ask because you could use the mortgage-equity band of investment and debt coverage ratio to develop a cap rate based on "you" and compare to any market caps in your area. You can also use the lending terms to include a loan in your DCF to calculate your leveraged cash-on-cash returns. 

Agreed! The laws were changed so that a "Scope of Work" now dictates everything. There are basically two types of reports now: Restricted Appraisal Report and Appraisal Report. An yes, the SOW (Scope of Work) dictates the level of property inspection. Many investors call us for investment analyses, evaluations, Oral Reports or Restricted Reports when they don't need a more detailed appraisal or higher level of reporting. All of these options are much cheaper than what was formerly referred to as Summary Appraisals of Self-Contained Appraisals. 

Thanks so much for the replies! I will definitely check them out!

Hi! I'm a new member from West Tennessee. I'm a partner in a sort of unique company that is a full service appraisal firm (all property types) but also provides civil engineering (mainly subdivision design and development), land surveying and title analysis services. I love meeting new people in the real estate field and value insights from investors in the market. I'm wanting to begin investing myself but do not have very much knowledge on the financing from a hard money, private lending or joint venture perspective. Hoping to enhance my knowledge and look forward to meeting new people.