Investment Property
Investment Property – Market Value Versus Real Value
By Buyincomeproperty.com
Nov 7, 2005, 20:18

Appraisers and real estate agents have tried to figure some way to add in certain intangibles as they affect the value of investment property. This is especially important if you’re considering purchasing investment property. Just consider some real scenarios.

A police officer arrived at his home in a rather small Midwestern town to discover his wife shot to death in the living room and his daughter dead in the back yard. Eventually, crews were called in to clean the scene, but one must consider what this has done to the value of the property, especially if the buyer is considering the purchase as investment property. In the smaller community, the local people know the history of the house and it may very well be difficult to sell - making less likely to be lucrative investment property.

If you’ve chosen investment property in areas that aren’t growing economically, you’re probably hoping to draw a buyer from someone in the area who is ready to purchase instead of renting or to move into a better home – your investment property. If you purchase a home as investment property with a history like the one described, you may very well be eliminating all the locals from the pool of potential buyers.

In the case of this property, the entire backyard was eventually dug up and hauled away because the smell of blood became so prevalent in warmer weather. This is a physical condition that will negatively impact the potential for a sale, and makes the property worth less as investment property.

Even if you choose to rent the investment property, you may not keep renters for long periods of time. You may be spending all your time cleaning from one renter’s move out and searching for new renters for your investment property. If you sell the investment property, you may be caught up in litigation if the new owners face the smell of blood or other physical detriments from the acts in the house, or you may even face litigation for selling the house without divulging the negative history. Sound like a gray area? That’s because it is, but it could still tie you and your assets – including your investment property - up in court while the issue is settled.

It can be argued that an action that occurred in the investment property shouldn’t be an issue once the physical evidence has been cleared away, as long as there are no lasting signs (such as the blood in the yard). There’s certainly no way for an appraiser or real estate agent to completely gauge the effect on the investment property.

This sort of negative impact isn’t limited to the scene of a crime. The same could be true of investment property that’s generally know to be the home of a drug dealer, criminal or anyone who is considered a notorious figure.