Yesterday I called a RE broker in my town to get some information about the 'possibility' of her selling one or two of my rental properties in today's market.

This broker/agent has sold numerous houses in the same neighborhoods where I own rental houses. Sometime next week, I will be meeting with her to show her my entire portfolio and hopefully get an idea of what my portfolio of houses is actually worth in today's market.

As we all know, SFH can be sold to retail buyers or other investors. However, according to this broker/agent, if any of my houses are worth LESS THAN $50K,...then no bank or mortgage company will write a mortgage for any amount LESS than $50K. Do you all agree with this? Is this information correct?

In other words, if any of my houses are worth less than $50K, then I will be stuck with selling them only to another investor,...unless my retail buyer can pay all cash which is rare.

The reason I want to meet with this broker is so that she can look at my portfolio of my rental properties and tell me if my houses are worth more or less than the $50K.

What kind of nonsense is that? I could see if the house didn't have the utilities and heating systems, etc. for a conventional mortgage, but why Would they care the $ amount?

You don't go to your banker to look at the Mls. Call a few banks and get info on lending traditional mortgages on houses less than 50k.

I really do my best to ignore most realtor advice. For me, their job is to unlock the door and let me in.

I'd like to know what you find out about this from your local banks.

PattyK,

I have no immediate plans to sell anything. However, I would still like to know what my rental houses are worth in today's market so that I can calculate my own Net Worth.

I know the cost basis of my houses and I know what my debt load is,...I just need to know the market value of my rental properties,...if I decided to liquidate.

How would you determine the market value of your properties, without having to actually sell them to learn the answer here?

Determining values without selling requires an appraisal. For the most part.

value can be determined by using the rental value approach.

I can't get my head around why you need to involve anyone? Your not doing this so you can show and tell WHAT YOU HAVE?

Roy, appraisers look into the past because that WHAT THEY SOLD FOR! That's what they're worth. You may have bought them as foreclosures, but I'm assuming you remodeled.

I don't know how much experience you have in selling, but banks use appraisals to determine value. They don't use comparable listings. You can list a house for whatever you want. It may or may not sell. Recent sales determine open market value. No way around that.

Private sales between investors are values based on mutual agreement of the operations of the building and personal needs. Rich Uncle Jim selling

to broke nephew Johnny a house for $5,000 that's worth $50,000 is not an accurate representation of market value.

Well no I wasn't asking that you show it here at all. Why would you need a Realtor to tell you? That's all i meant.

Using the income approach should get you close-- after all it is renal income.

I think using a realtor to give you an estimate of house worth is probably your easiest way to get that info. One morning and you are done. No cost to you.

In my opinion, I would also guess a realtor is going to give you a somewhat higher value than what it would really sell for. One, I imagine if people shop realtors prior to listing a house, they go with the realtor who will list a house higher, rather than lower. That, and houses typically sell for less than asking price (since we don't live in California...).

if there is a # of units and the portfolio is being evaluated as it sits at a given point in time, then the best thing is to spend the 1500.00 or more to have a report done.

Roy, I believe that your realtor is giving you accurate information for homeowner buyers seeking conforming mortgages. This higher threshold of amount financed is a consequence of Dodd-Frank. The issues are the compliance costs + limitations on fees that can be charged.

re: "no bank or mortgage company will write a mortgage for any amount LESS than $50K."

For the last 10 years, I have been a buy and hold type investor. However, my past investment strategy is not engraved in stone for the future though.

For example: lets take my best house in the best neighborhood,...I "think" this house is worth at least $50K to a retail buyer. However, if a seasoned RE broker looked at this house and said "If that was my listing, I could easily get $85K for it",...that would get my attention and put me in a selling mood. However, if the broker said the house only worth $50K, then I would just continue to rent it out.

To be honest, I really do not know what the true market values of any of my rental houses are. When I meet with this broker next week, I will ask her to pull some comps from the neighborhoods where I have rental houses. I need be able to see the asking prices and the actual sold prices. Only a licensed realtor can get access to the MLS where 'actual sold data' is listed. Plus, DOM or 'Days on the Market' is also another factor that I would use in determining how 'hot the market' is.

Specific mortgage brokers set limits on what loans the will pursue. The same amount of work goes into a $300,000 loan as a $25,000 loan, only difference is the size of the 1% funding fee.

Is she going inside your houses? Finishes will quickly change values of a house as you know.

Roy,

Just ask Zillow, the great and powerful wizard of all things real estate (and numbers their computer dreams up in cynerspace, not the real world!)

Seriously, it can give you some data but is NOT an accurate source!

I have not used a bank in 9 years, but back then their minimum loan was $40,000.

NE,

It will depend on the house and the neighborhood. The neighborhood will more influence on my house asking price than the house itself.

For example: I have a 1976 vintage MH in a crappy neighborhood. I doubt I could get any more than $15K since the surrounding foundation built houses only sell for $20K.

Roy put 20% above value- do all the financing and in 7 years take it back and do it again. (Did I just say that?) You are taking the risk. Max interest.

Do spend a little time to better understand the risks of financing a homeowner/primary residence buyer. These Dodd Frank rules apply to us all. One example is that if you finance someone who could not afford the house, then you are penalized 36 X the mortgage amount.

Who could "afford" well that is not made clear.

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Roy you should be able to get this type of information by evaluating price sold per square foot and comparing amenities in the same area.

Your agent can give you access to the sold comps, and then you can do the comparison and the math. Unless you already have an established relationship with a broker or agent (who DO stand to make some money if you list with them, and especially if you are loyal) then the agent could give you pie in the sky numbers. Sold comps however with similar amenities are more empirical, and that is what an appraiser would use anyway.

I would ignore the bit about the 50K mortgage issue. This is the buyer's problem, not yours. I know of 3 local banks in my area who routinely do small loans and hold them within their own portfolio (do not sell them on the secondary market.) You might compile a list of such lenders in your area.

Obviously if the comps support pricing over 50K that does make it simpler for your buyer, but again this is not your problem. Sometimes parents help a child buy a home, sometimes parents buy homes for their college kids to reside in while at university, sometimes modest buyers actually have cash, sometimes they can get USDA or VA or FHA financing.

Almost all my homes are below 50K like you. In my two markets in two different states I am not seeing 'below 50K' impede sales.