What does the tax assessed value have to do with the actual value of a property?
I am looking to invest in real estate. This would be my first ever purchase of a property for such reason. I have been told to always look at the assessed value of a property before buying to see if the property is priced well or not. How does this value compare to the actual value of a property? As I’ve been doing research, I’ve noticed the majority of the properties are priced way above their assessed value. Does that automatically mean they are overpriced? Or is it that the assessed value is a certain percentage of the actual value of a property? Anybody that would be willing to share their wisdom of real estate investing, please do!!!
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In some markets the assessed value might be equal to or lower than actual market value. In most markets it is under by 17% to 35%. What can be gleaned from a look at the assessments of the entire block of a home your interested in is how it rates among the rest. All assessments will be off but almost evenly down the street. The assessor doesn’t see the interior conditions or remodel upgrades. Some older people might have had their taxes abated or assessment frozen. This is why Zillow is so inacurate as often when recent sales info is sketchy it uses assessment as value. The old rule of thumb investor wise was never pay more than 65 cents on the market value, hence buy for assessment value. That dynamic has changed somewhat but keep in mind a never changing rule. Never pay more than what 1% of the price will bring in as monthly rent. A 100K house that cannot rent for 1K per month will lose you money. Some experienced investors can make such a property work but a beginner will lose money guaranteed. I have done this for decades and learned from some of the best.