Please don’t confuse LTV with FMV - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on July 28, 2003 at 24:53:37:
LTV is “loan to value” ratio. The loan amount against a property is divided by the property value and then converted to a percentage.
FMV is “fair market value.” It is an estimate of what typical buyers in the area will pay for the property, as other buyers have been paying similar prices for similar properties recently.
Now, if a property is not selling at 65% of FMV, there is probably something wrong with it that is not obvious. Or else the real estate market is very slow in that area for properties of that type.
If the asking price is truly 65% of fair market value, that sounds like a property worth considering buying. Buy and hold for positive cash flow.
Resell if you can for a profit. However, you had better know the market values better before you start trying to pull off deals like this. If it has been on the MLS for more than a week, it is not being listed at less than 80% if market value, I believe. Probably not being listed at less than 90% if FNV.
Good InvestingRon Starr**