As those prices fluctuate, there is a builders somewhere putting his feet up waiting to see a market turn more active because the last thing he wants to do is start paying crews to build houses, that could drop in value while he's halfway through the build process and losing equity halfway into the project.

Because I bought the property in cash I was able to pull a line of credit right away for 75% of the appraised value.

In addition lower rents will decrease the value of a property, not necessarily its appraised value, because no buyer will desire to pay retail for properties with reduced cash flow.

:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.

-------Building an ADU in Raleigh is a fantastic way to enhance your property’s value (a whole other discussion there) and increase your property’s income-earning potential. 

This is due to the fact that the property appraiser is reassessing the value after the sale of the property.

As a sidenote I see people doing this and jacking up the price of the home to seller finance to above market value - if you do this you better be VERY clear with your investors that you are writing a $300k loan on a $250k property as if you do not you can get in some serious hot water later on down the line when doing valuations of the company. 

I dealt with evictions, unexpected repairs, and the ups and downs of tenant relationships—but I also made huge strides in improving the property’s value and financial performance.

It really helps to see how Redwood properties stack up in terms of returns versus popular metro areas (from what I’ve heard).What would you do first if you were to break down the property’s biggest potential value-add?

In a text book case you'd buy a property for half of its ARV (after repair value) and then spend 25% of ARV on rehab and generate 25% equity.