The DEAL.

[Account Closed]

Hi everyone,

We all look for it, we all crave it, but do we really fully understand it? So many people look for the ultimate deal, but how many of us truly know a deal when we see it? I wanted to start a discussion about what a deal looks like and advice people might have on how to make sure its a deal.

Lets clarify perimeters for Investment deals. Lets clarify what is a good buy and hold property and whats a good flip property. Lets talk about what is good for New Jersey, South Jersey and North Jersey. Lets clarify the difference between strategies for the city and suburban towns. Lets clarify what key things to look for in a deal.

I'll start with some Stats for SJ:

Average flip profit- 25,000-30,000

Average rents- 850-1500 (depending on unit size)

Average START point for listing prices- 50,000-70,000

Average buy price- 40,000-60,000

Average days on market for flipped property- 30-90 days

I look forward to hearing everyones responses,

William Lees Jr

[Don Konipol]

My thinking has changed as the economic factors affecting our economy have changed, as the information available on properties far away from my base area has changed, and as my age and financial status has changed.

35 years ago I looked for home runs.   I wanted 12 -18% cap rates (interest rates were MUCH higher), and real estate I could buy for 25% + below REAL value.

Immediately after the crash of 2008 I sought properties in the most devastated areas (Phoenix, Miami, Las Vegas) that were (1) class A (2) one third previous sale price (3) 8-10 cap rate on residential.

Now I look at properties with a steady cash flow (depending on risk and property type), have rents that are short term adjustable in case of high inflation and have a potential equity "kicker", such as neighborhood being developed, restrictive zoning, university expansion, etc.

I now divide my portfolio in three areas, not always mutually exclusive.  

1- short term mortgage notes or long term mortgage notes purchased at large discounts (secured by commercial properties) for cash flow.  I average 16% annual

2- Cash flowing real property that is high end, adjustable rents if inflation hits, and moderate current NOI.

3- Speculative real estate investment, i.e., land, value added commercial turn around, and bets on neighborhood changes.

I believe its most important for a real estate participant to understand where he is on the real estate spectrum, i.e., investor, in the real estate business, or a service provider.  Again, these may not be mutually exclusive, and many are both investment and business.

A simple question to ask yourself is: do I want to use my capital to make money, do I want to use my personal effort to make money. or do I want to use both?