I was on the phone with a real estate investor last week and they asked a really good question. In fact, the more I thought about it, I wondered why more long-term buy & hold investors don’t ask the same question themselves. I was asked for my honest opinion on how many values can one property have…and how in the heck do I know which one is correct?
It seems like today, buying real estate and knowing an accurate value of the property is getting harder and harder. Investors are having to rely on putting together multiple pieces of information to arrive at a comfortable value and then make a determination on whether they should buy. What makes everything more difficult is that there are often reasons for the different values and they can often vary wildly. Here are four values that most real estate investors will run up against and at some point rely on for some input on determining value.
1.) Tax Assessed Property Value
A tax assessed value is usually determined by the local taxing authority as a way to quickly place a value on property in order to collect property tax. It would be so easy if every taxing authority used the same formula throughout the country, but that is not the case. Tax assessed values can be determined in multiple different ways and at varying times which, in short, means they are not always reliable.
Some cities and counties int he country assess properties at a percentage of their value. That would be the value that the city or county thinks the property would sell for under normal …read more