Which is more important? Cash Flow or Appraised Value
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Every day, we get the same question from Investors: "That's a nice property, what is the appraised value?"
Secretly, we give the serious side-eye, cynical look of scorn and skepticism when this comes up.
Trying to assess the appraised value of a property in a depressed financial market is like trying to figure out why we have a Electoral College. Or why Donald Trump's hair still looks that way. Or.....I could go on.
During the financial crisis, there was very little mortgage lending actively taking place in Metro Detroit. The criteria for an approved loan ruled out a great majority of the applicants, even ones with great credit.
So, condition 1: Tight lending criteria
Then, foreclosures flooded the market.Â Now, properties that sold for $100k or more at one time, were offered at rock bottom prices. This made cash purchases much easier and more prodigious in the area.
Condition 2: Very cheap foreclosures sold
Finally, as the dust settled from the sub-prime mortgage bust, underwriters began tightening the guidelines even more.
So, no loans given, foreclosed properties bringing the market down = A Very Bad ValueÂ Situation.
What's better? Cash Flow
Cash flow is a much better determinant to consider as a purchasing condition because whether values go up or down, the property is still pumping out cotton-candy flavored money. Mmmm mmm mmmm.
This will insulate real estate investors from deep market fluctuations - whether it's up or down, the property still produces!
Need properties that ooze income? Give us a call!
Good Luck and Happy Investing!
Patterson is a licensed Realtor in Michigan and certified Investor Agent Specialist. She has sold hundreds of
Investment Properties to Investors from all around the world andÂ loves
them invest wisely for immediate cash-flow, as well as long-term gain.
Letitia's mission is to help make Real Estate millionaires!
Letitia N. Patterson
Cell: 248 506-9426
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