Home Valuation in a Dodgy neighborhood
"Bad areas are tough to value as a owner-occupied property, because the business model for being a slumlord is to rent apartments in absentia, usually to tenants receiving goverment subsidies such as Section 8 vouchers. The vouchers are based on a prevailing rent, which are often on par with nice suburban apartment complexes due to how that ""prevailing"" rate is calculated. So the value of the house is really an annuity calculation. You figure out the potential rental cash flow and apply whatever your local market premium is. The point is, doing an apples to apples comparison is going to be tough, and justifying the cost of repairs that aren't remediating health and safety issues probably won't be recoverable from a home valuation standpoint. A buyer would probably rip out your central air conditioner and sell it! If I were in your shoes, I'd look at the time horizon that you think you're going to be there and amortize the cost over that period. Assuming your mortgage is small and you're staying for about 5 years, spending $10k costs you about $170 a month. Your reward is a modern A/C and heating system. Compare that cost to the cost of moving and your desires and see if it's worth it to you." Over the last ten years you have reaped the benefits of a good financial decision. (Presumably your low mortgage has freed up money for other financial priorities.) There would be no harm in making a clean break by selling as is.  On the other hand, the resale value would probably be rather low considering the condition and the neighborhood. I don't want to assume too much here, but if a potential buyer is interested in the house by virtue of not being able to afford a house in a better neighborhood or better condition, their finances and credit history may make it difficult for them to be approved for a mortgage. That would reduce the potential buyer pool and further reduce the sale price. If you can pull more in rent than the mortgage, you definitely have an opportunity to come ahead. Maybe window A/C units and a repaired chimney are enough if you're renting. Your rental income would pay for that in less than a year even while paying your mortgage for you. (Of course you don't want to become a sleazy slumlord either.) I wouldn't personally spend any money on an appraisal.  Spend some time yourself looking at Zillow.com and maybe Realtor.com and other sites to review recent sales in your specific area.  Not the houses a mile away.  Try to find comparables to yours.  The key factor is dollars per square foot.  See if the trend over the last couple of years is upwards or downwards in dollars per square foot of living area.  If it's downwards, I wouldn't invest for sure.
Enron did a wide range of dodgy financial accounting, using tricks to severely mis-represent their financial situation. They then used these doctored accounts to fool lenders and stock-buyers that the company had more money, and fewer debts or problems, than it really had. Eventually they ran out of money and went bankrupt, leaving the lenders and stock-buyers with nothing. I understand he's trying to tell us how rich he is here.  But what a retard - why would he want to take counterparty risk vs some dodgy boxing corporation?  The longer he waits, the more chance the cheque bounces.  Nobody would provide a loan to these businesses for less than 10% per year.  Floyd is doing that for 0% "Go on a website that has real estate listings.  Find similar homes in the same neighborhood and list out the prices.  Once you have prices, pick out two with different prices and call the realtor of the more expensive listing.  Tell that realtor about the other listing and ask why their listing is more expensive.  Compare their answer to the home that you are considering buying.   For example, they may say that their house has a newly remodeled kitchen.  Does the house you are considering have a newly remodeled kitchen?  If so, then use the higher priced listing and throw out the cheaper one.  If not, use the cheap listing and throw out the expensive one.   Or they might say that the expensive house is in a better location than the cheaper house.  Further away from traffic.  Easier to get to the highway or public transportation.  If so, ask how the location compares to the house you are actually considering.  The realtor will tell you if the listings are comparable.   When I talk about ""similar homes,"" I mean homes that are similar in square footage, number of bedrooms, and number of bathrooms.  Generally real estate sites will allow you to search by all of these as well as location.   After all this, the potential seller may still turn you down.  If he really wanted to sell, he'd have suggested a price.  He may just be seeing if you're willing to overpay.  If so, he could turn down an otherwise reasonable offer.  How much he is willing to take is up to him.   Note that this would all be easier if you just bought a house the normal way.  Then the realtors would do the comparables portion of the work.  You might be able to find a realtor or appraiser who would do the work for a set fee.  Perhaps your bank would help you with that, as they have to appraise the property to offer a mortgage.   You asked if you can buy out a mortgaged house with a mortgage.  Yes, you can.  That's a pretty normal occurrence.  Normally the realtors would make all the necessary arrangements.  I'm guessing that a title transfer company could handle that." How to get paid to take a trip to the grocery store:  Step 1: become an Amazon fresh driver  Step 2: get people in your neighborhood to sign up for and use amazon fresh  Step 3: go to a fresh grocery store/whole foods with Amazon's curbside delivery and let them load up your car with groceries for your entire neighborhood  Step 4: deliver groceries  Step 5: wait for that sweet Amazon payment &gt;Until there is a significant price pressure, it’s always going to be cost prohibitive to build high in earthquake prone zones. Those mitigation measures don’t come cheap at all.  It doesn't matter what the economics are if it's literally illegal.  &gt;As for the skyline, eh, that’s subjective. If the local culture values a “small town” or even bucolic feel, keeping buildings below tree lines isn’t regressive at all.  Sure... But blaming the problem on immigration when 75% of the city is zoned for &lt;3 story structures is ignorant. In regards to the legal recourse, no there is none.  Also, despite your frustrations with Citi, it may not be their fault.  Mortgage companies are now forced to select appraisers (essentially at random) through 3rd party Appraisal Resource Companies (ARCs).  This randomization mandate from the government was issued in order to combat fraud, but it is really causing more trouble for homeowners because it took away appraiser accountability.  Basically, there's nothing we can do to fire an appraiser anymore.  I've had appraiser do terrible jobs, just blatantly wrong, and have gone the distance with the dispute process only to find they won't change the value.  My favorite real-life example came from an appraiser who got the bedroom count wrong (4 instead of 5); yet he took pictures of 5 bedrooms.  The one he excluded he stated it shouldn't count because it didn't have a closet.  Problem is, it DID have a closet.  I had the homeowner take pictures of all of the closets in his house, and send them in.  He still refused to change the count.  After close to 2 months of the dispute process, the ARC came in and changed the count, but did not chagne the value, stating that the room count didn't increase the sqft, and there would be no adjustment in value.  I was floored.  The only solution we had was to wait for the appraisal to expire, then order it again; which we did.  The new appraiser got the count right, and surprisingly (not really), it came in at the right value... In regards to the value necessary to avoid MI, they are likely using 80%, but it's not based on your current balance vs the value, it's based on the new loan amount (which will include costs, prepaids, skipped mortgage payments, etc) vs the value. Here are your options: Get a new appraisal.  If you are confident the value is wrong, go somewhere else and get a new appraisal. Restructure the loan.  Any competent Loan Officer would have noticed that you are very close to 80%, and should have offer you the option of splitting the mortgage into a 1st and 2nd loan.  Keeping the first loan at 80%, and taking out a 2nd for the difference would avoid MI. Best Regards, Jared Newton Thinking of personal residence as investment is how we got the bubble and crash in housing prices, and the Great Recession. There is no guarantee that a house will appreciate, or even retain value. It's also an extremely illiquid item; selling it, especially if you're seeking a profit, can take a year or more. ' Housing is not guaranteed to appreciate constantly, or at all. Tastes change and renovations rarely pay for themselves. Things wear out and have costs. Neighborhoods change in popularity. Without rental income and the ability to write off some of the costs as business expense, it isn't clear the tax advantage closes that gap, especislly as the advantage is limited to the taxes upon your mortgage interest (by deducting that from AGI).  If this is the flavor of speculation you want to engage in, fine, but I've seen people screw themselves over this way and wind up forced to sell a house for a loss. By all means hope your home will be profitable, count it as part of your net wealth... but generally Lynch is wrong here, or at best oversimplified. A house can be an investment (or perhaps more accurately a business), or your home, but -- unless you're renting out the other half of a duplex,which splits the difference -- trying to treat it as both is dangerous accounting. Real estate. The value of the house where I live going up 15% per year! From 2004-2009. Sold for $92k in 1980 now valued at $524k. Twice the rate of inflation in that timeframe.   None of it makes sense nor is it sustainable = asset bubble. In my zip code the median income is $162k and median house value $808k (Source: US Census Bureau, American Community Survey 2012). That averages out 5x annual income.   In LA and Las Vegas that ratio is even worse, where most of these HELs and HELOCs are going to blow up. This article is accurate. People use these loans to replace their stagnating or falling wages. And its a lot of people.