Posted by Tony Colella on May 06, 2008 at 07:53:48:
In Reply to: Land/home valuation and expenses posted by Neil on May 05, 2008 at 22:19:01:
Neil,
I am not in favor of using CAP rates when buying most properties but the absolute rule with CAP rates has always been that you never apply them to single unit properties.
We break down in detail our Checkbook approach that we use and I have written quite a few posts about it here as well.
The first thing you need to do no matter how you choose to value it is to stop "assuming" anything. You need real numbers in order to begin to understand this property and how to value it.
From there you can determine how you wish to exit the property (i.e. sell the home rent the land etc.). Personally I would suggest that in this market you buy with the intention of holding for some time and make sure that the property pays you well enough to do so. From there you can entertain alternative exit stratgies.
As you indicated, our book and courses go into far greater detail into this and many other questions and strategies.
Tony
- Re: Land/home valuation and expenses Neil 18:30:11 05/07/08 (0)