But the children were willing to sell it to me for $305,000...so, in this transaction, the FMV really was $305,000.If you're thinking of "wholetailing" other properties (a blend of wholesaling and selling to a retail buyer), I can think of two ways to come up with the FMV.

There are strictly cash-flow and strictly appreciation style investors and then there's the blended type that look at the IRR (internal rate of return).

Are you interested in just a blended, blanket overall average?

I blended the two to serve my needs.Hope this helps,

Eventually Aggieland will just blend into Houston, with a few semi-rural suburbs towns connecting them. 

Instead I tried to blend and shim 1/2" drywall to the previous 1/2" drywall plus 1/2" (give or take) plaster. 

In this business you want to appeal to the masses not a niche so blend in. 

They simply park money for a return that beats inflation and look at equity multiple gains in 5,10,20 year outlooks unless someone comes along and buys them out for more than what they paid sooner.As mentioned you could also have someone in a 1031 looking at a huge tax penalty and 1 week left and decides a high value long term dirt play even if yield is not initially there might over time blend the return up so they go for it.  

@Edward Fedorovich, You're probably gonna want to rethink the 1031 angle or holding the property and blending that negative return into the positive returns on the rest of your portfolio as @Basit Siddiqi says.Because you're math is pretty right on when you also add the 11K ish of depreciation recapture mentioned by @Bill BrandtAdjusted basis is the cost of acquisition (32K) + capital improvements (20K) - depreciation (11k ish) = $41K.The difference between $41K and a sale of $325 is your gain - in other words sell and you may generate $108k of proceeds but you'll have a tax of somewhere around $47 K ish (thanks to TN being a tax free state).So selling without a 1031 will get you out of the mortgage but it will not let you get much of another property. 

However, if you are looking at the $500k you mentioned, when you find the Micro-markets that match your plan, and blend the MM and your Plan with the best strategy for that Micro-market and plan, it shouldn't take you more than a couple of years to achieve what you're looking for (or sooner).