Would You Buy Property Above Market Value?

Comments(10)

• 
  jeff1200222nd September, 2003

  It depends upon a couple of things. First, where is the "Market Value" established? If it is a word used by the county asessor to establish an amount to base the taxes from, you'll find that most of the time that number is low. Second, If the goal is to purchase for cash flow, and the numbers look good, it probably is'nt over Market Value as rents can be used to establish Value on Income properties.

• 
  fauche6522nd September, 2003

  I agree with Jeff. PCF is the key. IF the numbers work, ESPECIALLY if it's NMD, go for it. But make sure the numbers are positive!!
  Good Luck

• 
  Tedjr22nd September, 2003

  PCF before what expenses. I used to think that because I am handy and can fix a lot of stuff that I can afford to just break even because it will cost next to nothing to run the property. WRONG. I forgot about vacancy, bad debt and evictions, water heaters, carpet and paint. and tuns of stuff befor the mortage and taxes and insurance. I did do 100 % financing that will of course cut into cash flow. Just be carefull and really watch out for the above expenses and more.
  
  Thank you,
  
  Ted P. Stokely Jr
  ******
  No personal info within your posts, Ted.
  Thanks, raj
  ******
  [ Edited by rajwarrior on Date 09/23/2003 ]

• 
  GFous22nd September, 2003

  I once bought two duplexes from an investor and was able to assume existing financing with an interest rate at 8%. Market rates were about 9 1/2 % for this type of investment. I had no origination costs and the props cash flowed real well right out of the box.
  
  A realtor commented to me that I paid over "market". Hard to figure out how he knew since he did not know all the terms of the sale.
  
  My answer is that I would pay over what other people thing the market price is if the return was there. But then I would say I was paying market!
  
  Good luck and Good Buying!
  
  [addsig]

• 
  carolina_investor23rd September, 2003

  Thanks to all who responded.
  
  These props do cash flow well. My concerns about "market value" have to do with obtaining financing and determining a best guess for LTV so I can come up with some creative offers.
  
  I also agree with the basic sentiment here that if I can get them NMD and they cash flow enough for maint/taxes/ins./etc + profit that it looks like a winner. (not done doing research tho') I want to make sure the rents are not over market, that there are not major repairs, and I don't want to pay so much that I could not get out of them at a break even if needed. At this point I have not established what that value is.
  
  That being said, I was just wondering about how others determine "value". Since many people talk about finding motivated seller to get discounts, I wanted to know how many would pay -gasp- retail or better (if the numbers still worked).
  
  Thanks again for all the responses, keep them coming!

• 
  jorge12123rd September, 2003

  So long as the numbers work "market value" may be meaningless.

• 
  jorge12123rd September, 2003

  If you are able to negotiate good terms and the numbers work "market value" may be meaningless.

• 
  luvdavy22nd May, 2005

  I have overpaid for a bunch of lane on Ocean Blvd in Myrtle Beach and ended up making a boat load of money developing them into large duplexes and large condos. David 843-455-5500

• 
  ray_higdon23rd May, 2005

  I would assume this could mean your liquid/sub-liquid asset statements. Checking, savings, IRA/401k, stocks, bonds statements.
  [addsig]

• 
  prodigy_2k23rd May, 2005

  That is exactly correct all your assets that you have whether you have it in stock, iRA, real estate, property. Everything.
  
  Basically you can do it simple on an excel spreadsheet. Just have the month on top 2 columns across.
  Going down the name of asset, date acquired, purchase price, value
  
  Then a total column at the end.