Quick Appraisal Techniques
In addition to the standard evaluation techniques of comparables, courthouse records, tax assessments and appraisals to determine fair market value, properties can be evaluated in a number of other ways. Most evaluate the return on investment or are used to code an ideal property. There are a number of quick and easy coding systems that can help you evaluate properties:
- 1. Quick appraisal -The quick appraisal system codes the mid-range property according to a simple A,B,C system. The A property is the middle range property in your community, the ideal property for resale and marketing.
- 2. Profit Margin -The profit margin of a property is the fair market value minus the purchase price and is quoted as a percentage. A 40-50% profit margin is a fair deal with room for error. Even if the property needs work, there is still room for profit.
- 3. Conversion Ratio -The conversion ratio is a simple system of looking at the cash investment into the property and the equity in the property. Anytime you can find an investment that returns three times the equity of the property, generally the property is a good choice.
