Melvin Feller owns and is the founder/CEO of Melvin Feller Business group. He operates in Dallas Texas. A former sailor and proud supporter of our vets, Melvin now concentrates on business and his love of seeing people become successful in all areas of life. He is an avid Christian and knows all things are possible in Christ! He has been a domestic violence survivor in his marriage and divorce to Tina and more importantly a cancer survivor.
Melvin Feller Business Consultants Group Discusses How to Estimate a Property’s Current Market Value in Texas and Oklahoma
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Melvin Feller Business Consultants Group Discusses How to Estimate a Property’s Current Market Value in Texas and Oklahoma
Melvin
Feller Business Group in Burkburnett Ministries and Dallas Texas and
Lawton Oklahoma. Our mission is to call and equip a generation of
Christian entrepreneurs to do business as ministry. We provide workshops
and resources that help companies discover how to do business God’s way
and provide a positive outreach as the director. When the heart of a
business is service rather than self it can be transformed into a
fruitful business ministry earning a profit and being of service to the
community and their customers. Melvin Feller is currently pursuing another graduate degree in business organizations. How to Estimate a Property’s Current Market Value by Melvin Feller
The
most common mistake that many beginning real estate investors make is
that they pay too much for property. Fact is overpaying for property is
often cited as the number one reason why so many newcomers fail to make
it as profitable real estate investors. That is because most beginning
real estate investors are woefully undercapitalized, and they do not
have the deep pockets that are needed to subsidize their overpriced real
estate investments.
For
many neophyte investors, paying too much for their first investment
property usually proves to be a very costly and fatal mistake, and marks
the end of their foray into real estate. That is why it is imperative
that you learn how to accurately estimate the current market value of
potential investment properties! As far as I am concerned, it’s the
single most important aspect of the entire real estate investment
business!
I
once bought a real estate option on a filthy, neglected, run-down, but
structurally sound house in a neighborhood-in-transition in Utah, that
had been condemned for building, safety, and health and fire code
violations. This place looked like something right out of downtown
Baghdad, Iraq! It had what code enforcement inspectors commonly refer to
as accumulations of every type of debris, garbage and junk known to
humankind! The property’s owner wanted the steady stream of threatening
letters from the Code Enforcement Office to stop. How to Estimate a Property’s Current Market Value by Melvin Feller
I
had done my homework, and knew the property was worth at least $110,000
after it was cleaned up. I ended up paying $500 for a one-year option
to purchase the house for $75,000. It cost me $2000 to have all of the
accumulations removed from the property, and the house, driveway and
walkways pressure washed. Three weeks later, I sold my real estate
option agreement for a $15,000 profit! This never would have happened if
I had been clueless about how to estimate property values. Since I had
an accurate estimate as to how much the property was worth in its
current condition, I was able to negotiate a below market purchase price
that was based on the property’s filthy, neglected, run-down
non-marketable condition, and not on how much it might have been worth
after it had been cleaned up.
There is No Kelly Blue Book for Real Estate Investors to Look Up Property Values
Sadly,
there is no Kelly Blue Book equivalent for real estate investors to
lookup used property prices in, so you are going to have to learn for
yourself how to estimate the current market value of potential
investment properties. However, thanks to computers and the Internet, in
most real estate markets it’s not that difficult to get a rough
estimate of a property’s current market value. This is especially true
for real estate investors located in counties where all property
ownership, sale and tax assessment records are available online.
The Definition of Market Value
The
Appraisal Foundation’s Uniform Standards of Professional Appraisal
Practice, defines market value as: “The most probable price a property
should bring in a competitive and open market under all conditions
requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeably, and assuming the sale price isn’t affected by undue
stimulus.”
The Difference Between Assessed Value and Appraised Value
The difference between a property’s tax-assessed value and its appraised value is as follows:
Tax Assessed Value:
Tax-assessed value is the value established by the local taxing
authority for a parcel of land and the improvements placed upon the land
for property tax purposes. For example, in Utah, owner-occupied
single-family houses are generally assessed at around seventy percent of
their fair market value by county property appraisers. How to Estimate a Property’s Current Market Value by Melvin Feller Appraised Value:
Appraised value is the value estimate given to a property by a licensed
property appraiser using accepted appraisal methods for the type of
property being appraised. For example, the accepted appraisal method to
accurately estimate the fair market value for an owner-occupied
single-family house is the comparison sales method where a property’s
value is based on the recent sale of comparable properties within the
same area.
The Three Common Methods Used to Estimate Property Values
The three most common methods used by property appraisers to estimate property values are the:
Comparison Sales Method:
The comparison sales method bases a property’s value on the recent sale
prices of properties that are within the same area and comparable in
size, quality, amenities and features.
Income Method: The income method is used to estimate the value of an income producing property based on the net income the property produces.
Replacement Cost Method:
The replacement cost method is based on what it would cost to replace
the improvements on property using similar construction materials and
construction methods. How to Estimate a Property’s Current Market Value by Melvin Feller The Comparison Sales Method of Estimating a Property’s Value
The
comparison sales method of estimating a property’s value is based on
the recent sale prices of properties within the same area that are
comparable in size, amenities and features. In order to be accurate,
sale price adjustments must be made for comparable properties that have
been sold at unrealistically low prices or on overly favorable financial
terms not readily available to the buying public.
The Income Method of Estimating a Property’s Value
The
income method is used to estimate the value of an income producing
property based on the net income the property produces. Under the
income, method value is calculated using a:
Capitalization Rate. The capitalization rate, or cap rate, is calculated by dividing a property’s annual net operating income by its purchase price.
Gross Rent Multiplier. The
gross rent multiplier, or GRM, is calculated by dividing the purchase
price by the property’s monthly gross operating income.
Watch Out for Owners Using Fuzzy Math How to Estimate a Property’s Current Market Value by Melvin Feller A word to the wise:
when you read a property’s income and expense statement, you should
always go under the assumption that the owner is probably practicing
fuzzy math by fudging on the numbers, and telling little white lies to
back them up. Also, use a monthly income and expense analysis worksheet
like the sample copy below, to crosscheck everything that is listed on a
property’s income and expense statement in order to reconcile the
statement with receipts and tax returns against what has shown on:
Schedule E (Supplemental Income and Loss) of the owner’s latest federal income tax return.
The
property’s latest annual tax assessment income and expense statement on
file at the county property appraiser or assessor’s office.
All of the rental agreements for the past year.
Water, sewage, solid waste, gas and electric bills for the past year.
Repair and capital improvement bills for the past year.
The Replacement Cost Method of Estimating a Property’s Value
The
replacement cost method of estimating a property’s value is based on
the cost of replacing the improvements on the property minus the cost of
the land to estimate a property’s value. Replacement costs are
calculated on a per square foot basis by dividing the total number of
square feet in the building by the per square foot construction cost.
For example, a two thousand square foot convenience store that cost
$375,000 to build would have a replacement cost of $187.50 per square
foot, $375,000 divided by 2000.
How to Get Free Building Replacement Cost Estimates How to Estimate a Property’s Current Market Value by Melvin Feller
You
can usually get a free building replacement cost estimate by calling a
local independent insurance broker who represents insurers that
specialize in providing property and casualty insurance coverage for
residential and commercial buildings. When you call a broker, tell them
that you want a replacement cost quote. Property replacement costs are
calculated by using a replacement cost formula that is based on the
property’s geographical location and its:
1. Street address. 2. Age. 3. Type of construction. 4. Number of stories. 5. Type of roof. 6. Current use. 7. Heating and cooling system. 8. Square footage.
Use the Eight-Step Approach to Estimate a Property’s Current Market Value How to Estimate a Property’s Current Market Value by Melvin Feller
Use
the following eight-step approach and the current value worksheet on
the following page to get a rough estimate of a potential investment
property’s current market value:
Step # 1:
Log onto your county’s property appraiser or assessor’s Web site to
obtain the tax assessed value of the property under consideration.
Step # 2:
Search your county’s property tax rolls for recent sales of three to
five properties that are comparable in size, amenities and features, and
located within two miles of the property under consideration.
Step # 3:
Carefully analyze any comparable properties that you find, and make
sale price adjustments for differences in amenities, special features
and the property’s physical condition.
Step # 4: Verify the income and expenses that are listed on the income and expense statement of the property under consideration.
Step # 5: Analyze the property’s income and expenses for the past twelve months to estimate its net operating income potential.
Step # 6:
Calculate the property’s capitalization rate by dividing its potential
operating income by the estimated value that you derived from analyzing
recent sales of comparable properties in step number three.
Step #7:
Estimate the property’s value by multiplying its net operating income
by the capitalization rate you came up with for the property.
Step # 8: Calculate the cost of replacing the improvements on the property using the same building materials and method of construction. Melvin
Feller Business Consultant, Business Owner, Burkburnett ministries and
Graduate Student Candidate in Business OrganizationMelvin Feller Business Consultants Ministries Group in Texas and Oklahoma.
Melvin Feller founded Melvin Feller Business Consultants Group and
Burkburnett Ministries in the 1970s to help individuals and
organizations achieve their specific Victory. Victory as defined by the
individual or organization are achieving strategic objectives, exceeding
goals, getting results or desired outcomes and a positive outreach with
grace and as a ministries. He has extensive experience assisting
businesses achieve top and bottom line results. He has broad practical
experience creating WINNERS in many organizations and industries. He has
hands-on experience in executive leadership, operations, logistics,
sales, program management, organizational development, training, and
customer service. He has coached teams to achieve results in strategic
planning, business development, organizational design, sales, and
customer response and business process improvement. He has prepared and
presented many workshops nationally and internationally.
Melvin Feller Business Group Discusses Work Life Limitations from a Texas Business Owner Melvin Feller Business Group in Burkburnett Ministries and Dallas Texas and Lawton Oklahoma. Our mission is to call and equip a generation of Christian entrepreneurs to do business as ministry. We provide workshops and resources that help companies discover how to do business God’s way and provide a positive outreach as the director. When the heart of a business is service rather than self it can be transformed into a fruitful business ministry earning a profit and being of service to the community and their customers. Melvin Feller is currently pursuing another graduate degree in business organizations. Work Life Limitations by Melvin Feller Setting healthy boundaries is essential for a healthy work life balance. That sounds true, but what does it mean? What do healthy limitations look like, and how can you know where and how to set them? I notice a tendency ...
What is Christian Life and Business Coaching with Melvin Feller Melvin Feller Is a Certified Christian Business Consultant in Texas and Oklahoma. He has a passion to equip a generation of Christian entrepreneurs to do business as business ministry. Melvin Feller Is a Certified Christian Business Consultant in Texas and Oklahoma Melvin Feller Is a Certified Christian Business Consultant and his coaching is expressly designed to help individuals discover God’s calling on their lives, overcome life’s challenges and to develop to their fullest potential. We blend practical coaching and counseling tools with a sound Biblical Worldview. Melvin Feller through Melvin Feller Business Consultants Group Business Ministries is committed to practical Life Coaching, mentoring and counseling processes and resources that will equip individuals while fostering healthy and positive change. Whether you are a Christian or not, Melvin Feller’s Christian Life Coachin...
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