This may be a dumb question, but..... - Posted by Craig

Posted by Don on May 25, 2005 at 08:46:22:

A few quick answers:

As for houses, look to where the best profit potential is. It may (or may not) be cheaper homes. Very often, it’s middle-class homes. In the Midwest, that might be $90,000; in the Mid-Atlantic area that’s over $500,000. Then you have to develop an approach to buy, and profit from, those properties. What you need to do is become comfortable with an approach that requires very little of your own money down.

Second, assessed value is not a good indicator of actual value. In some areas, the properties are supposed to be assessed at 100% of fair market value, but even there the assessments often lag. What assessments may tell you is the relative value of different homes in an area. However, to determine actual value, you have to look at recent sales–what are people actually paying?

As for an assessment being higher than the actual value, that’s unusual; usually the homeowner would appeal an out-of-line assessment. But, for instance, there’s a house near my home that’s assessed for more than it’s actually worth because the owners are trying to renovate it; they’ve stripped off the walls, dug up the lawn, etc. It’s assessed at $400,000, but really–today–is worth maybe $250,000…and that’s mostly the land. If you run across an anomaly like that, try to find out what’s going on.

This may be a dumb question, but… - Posted by Craig

Posted by Craig on May 21, 2005 at 18:04:49:

I’m looking to start out in my Real Estate investing career and have a couple of questions.

My first question: When just beginning, should I look for cheaper homes since I don’t have the funds built up like many others? I live in a hot market right now (California) so I tend to think my chances are slim starting out in a market where a lot of people already are.

Also my other question (the dumb one!): When you read about the assessed tax value of the land, is that an accurate figure? I have come across a home located out of my state that is selling for $12,000 but the assessed value of the land and home is worth $36k. Now to me being new, that looks like a good bargain but then I’ve heard people on here saying that an assessed value isn’t quite accurate.

I just need some pointers I guess before I jump into this, and any stories/tidbits anybody is willing to share feel free to e-mail me as I love hearing personal stories about how people got started from when they were in my shoes. Anybody who started in a location outside of their state as well, as that’s what I’m thinking of doing currently. Thanks!