Posted by Dave on June 04, 1999 at 17:34:52:
I’ve ran into someone who has quite a few townhomes and houses for sale (he wants to retire). Asking price on the townhomes is $80K firm. Rents are $950 per unit, tenants pay all utilities including water and trash. Units are 3-5 years old. Here’s the deal, the assessed value on the townhomes are $96,500 per unit (just raised). Whether or not this is fair market value I don’t think so. Probably high 80’s. I have a lender (credit union) that will lend 80% of appraised OR assesed value with no points fixed 7% for 15 years (then balooning). With the assessed value so high, it looks like I would have approximately 17% equity right away (according to the assessor) leaving very little to come up with for a down payment. The real estate market in my area is strong and it is hard to find properties below FMV. I know $80k per unit is a lot of money and maybe there are better ways to make money but I don’t want to let something slip away here either if it is worth pursuing. I’m not a newbie (I own 6 houses) but I’m curious if any seasoned investors would act on this. I’ve posted before on this situation but the tables have turned since the valuations on these were just raised. Thanks for any feedback.