All Forum Posts by: Tony Kohnle

@Byron Scott

To put it another way, the seller is analyzing a deal to usually get the best price for himself. A buyer is analyzing a deal to usually get the best price for themselves. An appraiser is hired by the bank as an independent third party to estimate the most reasonable price the property would sell for between most buyers and sellers so they can judge how risky the loan is.

If they believe most buyers would factor the rent increases into the purchase price, then they should consider them...while fully disclosing the current income levels. The lender then can decide how much to lend and at what interest rate based on their underwriting standards for potential income.

@Byron Scott

Make your offer at the price you are willing to pay, and it would be smart to put in an appraisal contingency.

The appraiser should consider both comps and income and make their own decision on if the potential for increased rent would support a price higher than the available comps. They may or may not. It depends on the quality and amount of supporting information and their knowledge of the market.

It also, as noted, can depend on any lenders requirements, as the appraisal will be for the lenders use in deciding whether they want to make a loan in the property, and they can say they don’t want to consider any particular approach.

I haven't done any Tax auctions but i am aware that they are subject to redemption by the people who lost the property for a year or two, make sure you know how long and what interest rate they would have to pay/financing you can get before bidding. it also may make a flip less do-able.   

Also read up on "Heirs land" as a lot of these end up on the tax auction rolls and can be troublesome. Basically, its land owned by descendants of former slaves that may have passed through generations without any deed change, so dozens of potential heirs may have claim to it.  

Erik is correct on HOA's but technically incorrect on taxes. Owner occupied homes can assessed at a lower rate (4%) and be exempted from school operating taxes. All other non-industrial properties are assessed at 6% regardless of where the owner lives. The net effect though is that an owner occupied home will pay about 1/3 of what a rental home will pay. Also, a transfer of ownership triggers a reassessment of the property a year after the sale and wipes out any caps or exemptions that may have been in place, so don't assume prior taxes will be anything close to what you would have to pay.

I have had a couple of townhouses in a DRHorton development just down the street from Oyster Point and I wholeheartedly agree with the subcontractor comments. Mine are decent overall quality but were built in 06 and 07 when things were also really booming and there have been some issues. Most units had HVAC issues and a few units had mold under the eifs/stucco. but that was very common in this steamy climate.

The funny thing is you can tell they put the worst subs in the unit that got significantly fewer upgrades/options. it has more nail pops and bad trim joints than the one that did have a few upgraded finishes. you get what you pay for i guess.

I have only walked by the Oyster Point townhouses (extending a walk in the little pocket park next door), but the looked like fairly decent quality. Not custom built, but probably worth a look.  
 

Originally posted by @Jay Hinrichs:

Jim is not redlining he is simply drawing lines on a map and describing neighborhoods based on age and theft and school data.. I suspect.

 That is exactly what he's doing. Major sections of his "B' areas are predominately (or close to it) minority  populated areas. This  includes Garfield Heights, Richmond Heights,and South Euclid among others. Shaker Heights, an "A" neighborhood is close to half racially minority and well into predominantly minority if you add religious minority into the mix. Conversely, some of the "F" neighborhoods on the west side are significantly, if not predominately white. I am sure if you put the data in a spread sheet you wold see a near perfect correlation to income levels, a lower, but still significant correlation to education, and much lower correlation to race.

Which, by the way, is probably the way you want to address any blowback you might get from this James.

@Nancy Roth Wow, what a tragic situation. You get to see all kinds of misery when you are a landlord. Particularly in low income stuff. I agree with the poster that said you can’t get involved in things or it will burn you out, but Thant doesn’t mean you can’t show some sympathy or offer help. The woman has been seriously ill and lost her job in the last year and had two kids murdered. she hasnt ask for a thing, so shes not scamming you, they have been long term tenants who paid off the mortgage in a year, so you have no mortgage but are still guaranteed most of the rent. It could do wonders for her (and you) to send her a compliance card and flowers or a ham or something, and let her know if she wants to move to someplace she would feel safer or has no bad memories you would be willing to work with her caseworker to find something else. That’s cost you maybe $50. If she wants to stay, absorbing a couple months reduced rent to allow her a bit of time to mourn and recover also shouldn’t be to hard on you.

Congrats on the movement to get started. I’m an appraiser not a Realtor, but can probably give you a couple names if nobody else jumps on. I’m a bit busy this weekend but will try to stay on top of the the thread. Your focus seems pretty spread out, are looking for Realtor leadership in finding the type of property, or just open to any type and want a realtor to bring you what they know best?

@Eric.S It’s generally known as the 25% exemption around here but I guess each county could call it something different. Are you talking to a Commercial appraiser in a South Carolina Assessors office? It’s only applicable to non owner occupied properties so I can see a residential appraiser being unfamiliar with it.

Lots of Due diligence..... Seriously though, Hotels are a completely different animal than homes or apartments. If you can get good, experienced management or a Chain operator to run it, it could be great. It sounds like you would probably have to do major updating to get it attractive to someone like that though, and that’s a lot of rooms and event space to fill without a strong network to fill the pipeline, assuming the local demographics even support that kind of need.

I would be in the “doesn’t really happen in the real world but I just did it in my current home. A neighbor I’d known for a couple years was trying to FSBO at just over market as he was being transferred. When he was running out of time I offered him his price if he financed for a few years. And he accepted with no down payment and a market amortization. Three years appreciation and minor repair and paydown were flipped into a regular 30 year mortgage. It would never of happened if he didn’t know me and trust me to maintain and improve the property and if he wasn’t in a position that he was satisfied with straight interest and saving transaction costs. I think the NNN scenario has potential for a tired old landlord that wants to retire and still have cash flow, but only to an experienced buyer, not a nubie. Tax implications would be a big factor, as would the predetermined buyout(or methodology for calculating future buyout amount), but the big factor would be their desire to max out profits weighted against their desired quality of life. But those deals are almost always a result of being observant at the right place and time. Trying to build a business model out of it is more likely to be a waste of time and resources. If you enjoy spending your time at the river with a pan in your hand, you can occasionally find a nugget of gold, but the guy that builds the flour mill is much more likely to feed his family well.