I am selling 30 lots and 3 houses in a area of my town. I have owned this property for over 3 years. I was going to do a development myself, but I learned very quickly there are better ways to make money in Real Estate.
Sidenote: Jack and Jill have discussed this property over the phone with me and gave me advice. Those are both funny stories I can tell some other time.
Anyway between buying, holding, cost and doing demo I have probably but $185k into this project. Thank God I had rental houses on this property or it would have cost me way more.
Another sidenote: Serious issues plagued me the whole time I have owned this property. Which include the two squatting meth heads that I couldn’t get to move their trailer. The burning cars in a wooded area. The meth dealer that held the tow company at gun point because I called them move his car off my property. And sooo many more stories.
Anyway back to the orginal story. I finally sold 2 lots to a builder for $10k each and found a buyer for the other 31 lots and houses. We finally get to the appraisal part. So my realtor calls me and says we have a problem.
The appraisal comes back at $115k!
There are several issues here:
1. The person who did the appraisal was the same person who did the appraisal when I bought them. I bought it all at $145k.
2. I just sold 2 lots for $10k a piece. Even if you discount a bulk buy that doesn’t make since
3. And there were rental houses on the lots that cashflow.
Well my realtor caught the issue. The appraiser did the wrong type of appraisal.
He did a vacant lot appraisal which left out the houses and only did the land at face value. ( I still think it should have been more).
The bank ordered a development appraisal, which takes into account future improved value based on what the new developer is going to do.
They had all given up on the deal. And the buyer was thinking about maybe getting a lone of credit to close.
Think about that. The appraisal did the wrong appraisal and never double checked. The bank took the appraisers word. And the buyer never looked at the appraisal to see the issue. Onky my realtor found the error.
So hopefully we will close soon at my asking.
Morals to this story: 1.Either be very diligent yourself or higher good professionals. 2. Become a developer if you are ready for the headaches. 3.And Jack and Jill know more than they look like they know – just kidding.
But thanks to them they gave me a lot of free advice and that’s why I joined because I knew it would be worth it.
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