Never buy in a war zone period Michael. I have a friend that did that and he is regretting it seriously. You can always find cheap houses out there, but that does not make them a good investment. You want to buy in desirable neighborhoods with good school districts if possible. It won't matter if it is a rental or just an eventual flip this is best practice in my opinion. Rule #1 location will always be KING.
If you are looking at an investment opportunity in the SFR world a safe bet would be to have dual exit strategies of selling or renting. The rental market right now is hot. I would shoot for a Cap rate of 10-13%.
I am guessing this question is in relation to the other one you asked that I answered. Hope it helps and good luck to you.
There are no formulas. You will get for the house what someone feels it is worth today.
Sign up with a Realtor and have them do a CMA (Comparative Market Analysis- it compares the value of your home to others in the neighborhood that have recently sold). This price can vary a lot with the number of foreclosed homes, new improvements to the neighborhood, and so on. I have one seller, who is in a similar situation to your, but the light rail is coming through pretty close to his house and that might help. Contact the city and see if any improvements are coming your way.
Feel free to contact me and I will try to make this a painless as possible.
God bless you.
Carolyn Jass, Realtor
Twin Cities Real Estate, Equal Housing Opportunity
As the classic investment disclaimer goes: "past performance is not an indication of future returns." In the end nobody really knows what a house with be worth next month, let alone five years from now. My advice to people who are only going to inhabit a property for five years is to live in the house and love it first, and worry about the resale value later. Not that it shouldn't be a consideration, but in the end nobody really knows what the future holds for any sort of investment and real estate is no exception these days. Good luck with your purchase.
Coldwell Banker Burnet
licensed MN Real Estate Broker