Tony Martinez on DIY Valuation - A Beginner's Guide
Tony Martinez is the Founder and Chairman of the US Tax Lien Association, which is an organization that is committed and dedicated to helping others achieve total financial freedom through the power of investing in Tax Lien Certificates. With over 30 years of expert experience, Tony is the world's #1 authority on the subject of creating enduring wealth through the little know strategy of investing in Tax Lien Certificates, which gives anyone the opportunity to earn guaranteed fixed rates of returns of 18% – 36% interest per year, and acquire valuable real estate for approximately 10% of market value.
Your ability to estimate the value of a property is crucial in this business for obvious reasons. For out of state, foreign, and even domestic investors, how do you determine the value of a property? What factors affect value? I will discuss some of our methods to collect the data that will help you determine the value of a property, and ultimately whether it is a good investment or not.
To determine value, begin by evaluating how much rehab your prospective investment needs. It is very likely that the property will need some level of rehab work; it’s the nature of the tax deed investing business. If the property is some distance away you could call a friend in the area, or even a realtor to do some legwork by getting photos and an analysis of the property for you. Unfortunately not every realtor has an eye that can detect code violations or can estimate repair costs. Very often realtors send me one or two pictures with some comps of the area, but this is not sufficient. So, unless your friend has an eye for what you need and can provide a detailed analysis of the state of the property, it may be best to turn to a professional.
To avoid creating future headaches consider using Property Snapshots. If you go to their website (www.propertysnapshots-report.com) you can order an affordable property analysis. It is available everywhere in the country, especially in metropolitan areas. The detailed reports they provide will greatly improve your estimates on the amount of rehabbing needed. I recommend reviewing their report samples so that if you must use a friend or realtor, you can request that they look for the same things listed there. Examining their reports will also help to expand your knowledge of what to look for when examining a property.
Additionally consider location…location, location, location! We rely on the same type of factors that control market values of properties. Realtors can help with this by pulling comps on comparable homes nearby. Property Snapshots will be useful by pointing out issues with the surrounding area. For example, they report on the distance to commercial zoning. It is possible that at one time something like a gas station could have contaminated the soil nearby, this could potentially hurt the value of the property because of the environmental pollutants. Something else to consider is the proximity to a fire station. This affects insurance prices and marketability of the home.
Begin brainstorming other ways you could acquire information about your prospective investment. If you receive local help, keep a log of those you spoke with and what they helped you with. Once you begin investing in multiple areas it will be difficult to remember who you spoke to where and when, or if they were even helpful.
It will take time but once you are working in the field, you will begin to fine-tune your ability to see a good investment much faster than you would have in the beginning.