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Earning income from appraisal without doing all the work.

ramrcdk

Senior Member
Joined
Jan 15, 2008
Professional Status
Certified Residential Appraiser
State
North Carolina
This is not a good flip candidate however it is a good rental property candidate. Tenants are a lot more forgiving about roads close to houses and other obs....if you can buy cheap enough to generate rental positive cash flow ...
Invest to rent...at some point sell? External ...15 feet... for liability kids, pets, etc....... Not for me!!!!
 
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J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Invest to rent...at some point sell? External ...15 feet... for liability kids, pets, etc....... Not for me!!!!
I see rental properties ( and appraise them ) located close to busy roads, railroad tracks etc. What extra liability would that pose for the owner ? It's not a swimming pool on the property. Put a fence up if makes you feel better.
 

Doug in NC

Thread Starter
Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
I think DTB got it right on this one. Unless the seller will lower his price another $30K (and that does not seem likely, not right away at least), I don't think the risk would justify the potential reward.
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
I see rental properties ( and appraise them ) located close to busy roads, railroad tracks etc. What extra liability would that pose for the owner ? It's not a swimming pool on the property. Put a fence up if makes you feel better.
I would not worry about the liability but it will tamp down rents and resale. 2 no-goes in my world.
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
I think DTB got it right on this one. Unless the seller will lower his price another $30K (and that does not seem likely, not right away at least), I don't think the risk would justify the potential reward.
You want to buy at a good price, not just cheap junkie properties.
When you buy, it becomes your baby and the warts are now yours. :sneaky:
 

ramrcdk

Senior Member
Joined
Jan 15, 2008
Professional Status
Certified Residential Appraiser
State
North Carolina
I see rental properties ( and appraise them ) located close to busy roads, railroad tracks etc. What extra liability would that pose for the owner ? It's not a swimming pool on the property. Put a fence up if makes you feel better.
FOR me: I would find other possibilities. For me: liability of the tenants, unknown outcomes for liability. We have always covered all properties, even commercial triple net type leases.
For me: preference.
 

KYLECODY

Senior Member
Joined
Apr 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
No, I've actually got my first RE deal under contract right now and I really like the investment side. I would have gotten into the business 15 years ago were it not for my indescribably risk averse wife. If this first deal goes through as planned I anticipate I'll earn about ten times what I earn as an appraiser for the same time input. It really frustrates me right now that I can't pour more time into my investment business because I am so tied up with appraisal work.
Retain your highest paid appraisal clients and decline everything else. Cut your appraisal work down to 20 hrs a week or whatever you think is minimal to give you enough time to try something else. My hourly "wage" on flips is 5-6X minimum on typical deals versus my appraisal wage. There is some risk but if you know properties, numbers and housing (you are an appraiser) the risk is minimal. I've bought countless houses sight unseen and even the ones I do see before buying I do my own walkthrough without an actual inspection. Unless its fire damage or structural damage anything else is going to be relatively minor and fixable with a little money. If the numbers are right its just part of the game and you factor it in. I usually spend 10-15k in updates and fixes and roughly the same on the commissions, title and closing costs. Its all about the buy price. You make when you buy, not when you sell.

The most useful thing I ever learned in appraising was in my very first week of "class" from some pretentious New Mexico via New York appraiser/investor/teacher. He said the most valuable thing about being an appraiser is being able to scout out good deals on real estate to make money on.

I can bust my arse driving around town half the day, calling homeowners trying to schedule appointments in their "very important" schedule, listen to revision requests, open up the same report 2-3 times over nonsense after the fact, or explain why the golden toilet doesn't add value to the house, etc for 2-3 months to make $X amount of money or I can just suck it up and buy another flip, put in about 40 hours total in "work" (most of which is just drive time and writing checks to tradesman) and make the same amount and have the rest of that 2-3 month window to relax and enjoy life...The decision where to concentrate is easy. Whenever I close another house and see that check I constantly kick myself about why I spend any time at all messing around with appraising other than to have something to do.
 
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KYLECODY

Senior Member
Joined
Apr 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
Every property I come into contact with as an investor would be a nightmare for me wearing my appraisal hat. What I'm coming to understand is that the seller's problem is an investor's opportunity. The more problems there are to fix tends to balance well with the price a seller is willing to let the property go for.

Talked to a guy today who wants to sell a house that should sell for $130K after a rehab but only wants $80K for the house. The caveat is that the state is taking supposedly about 15 feet of frontage off the lot for a road widening project. After the frontage is taken, he says the road will only be about 15 feet from the house. I wonder what the cost of moving a house 30 feet back toward the rear of the lot would be? (assuming the remaining lot size and zoning restrictions would allow it)
Ugh..Theres too much low lying fruit available to want to deal with anything like that. The juice isn't worth the squeeze on that one.
 
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Doug in NC

Thread Starter
Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Ugh..Theres too much low lying fruit available to want to deal with anything like that. The juice isn't worth the squeeze on that one.
You're probably right about that. I am not actually finding a lot of low-lying fruit though. The best areas are highly competitive for finding good flip prospects. I'm thinking I'll have to work around the edges of the prime areas in order to find some deals. It's all a catch 22 though. I really want to get out of the appraisal business so I can start making really good money for my time and experience, but on the other hand I still need to keep up a good appraisal income to pay the bills while I prospect for more investment opportunities.

* I once ran into a former appraiser turned real estate developer. I was meeting the guy to appraise a tract of land that he had purchased. He arrived to meet me in his Maserati. Evidently good money to be made using our valuation skills outside of the appraisal business! I'm really excited for my future once I finally get out of the appraisal biz. I only wish I had figured this out 25 years ago.
 
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