All Forum Posts by: Adam Johns

@Giovanni Isaksen did a great job of laying it all out, but he may have mistyped. Just to avoid confusion (or maybe further it) the CAP rate is the NOI divided by the cost of the property, not the cash invested.

If you finance then the cap rate will not change, but the cash on cash return would be:

(NOI - debt servicing)/cash invested

If you buy a property with cash than COC and CAP rate are the same.

J Scott already addressed the expense thing so we'll leave it there. But to echo what someone else said, if you're happy with 7% and adverse to risk, look into some mutual funds. You'd probably make more like 8% and have more liquidity. I would never tell someone what's right or wrong to do with their money. I was just giving two examples.

Lance Cummins Assuming 50% of your rent goes to expenses, you'll make about 6K/yr off of your 83000 without financing, or about 7%. If you financed with 20% down, you'd pay about $360 a month to P&I, so you'd make about $1680/yr on $16,600 invested, or about 10%. On top of that, your tenants are paying your equity in, so your ROI is going to be much higher in the end (let's pretend you keep the house for 30 yrs and it doubles in value) Cash: 6000 * 30 = 180,000 + 166,000 (value at sale) = 346k - 83k = 263k / 83k = 316% ROI Financed: 1680 * 30 = 50,400 + 166k = 216,400 - 16,600 = 199,800 / 16,600 = 1204% That's doing a lot of assuming and it sort of keeps everything "in a vacuum", but I think it demonstrates the power of leverage. And if it's a question of risk, shifts in value are going to have a bigger impact when you're all-cash, also.

With realtors; turn over leads that would work as a short sale or traditional listing, but don't have enough room for you to work with. With other wholesalers; bring them a deal that you can't find a buyer for that has room for both of you to make money on and offer a split. People will have a hard time turning away someone who's giving them an opportunity to make money, but it's very easy to say no to someone who's just asking for favors.

Jim Marks hi! Welcome to BP! I'm on my phone right now, but expect a colleague request and PM from me tomorrow when I'm on my computer. I think we might be able to help each other out in the near future.

@Eli Hood I would definitely talk to a title company first. You may be required to have the funds to close your side of the transaction (the A to B, if seller is A, you're B and end buyer is C) seperate from the B to C funds. If that's the case, you'll have to get a transactional loan.

Even if you don't need to have the transactional funds in place, you'll need to verify who the certified checks should be made out to and know that the title company is comfortable doing a double close. Better to have the title company explain it to you step-by-step so that you know what to tell your buyer and seller without sounding like you're guessing.

If they stand to make closing costs x2 off of you (and the promise of more), they shouldn't have too much of a problem explaining the process to you.

@Kenneth Stuart

I think you got most of the "expected" expenses. One of the reasons that people use the 50% rule is that it should allow you to build up some cash reserves for the unexpected expenses. Say a pipe in a wall bursts, a tree falls, or AC goes out in the middle of summer. Also, if you need to evict someone, you essentially have no rent for maybe a few months as well as legal and court fees.

As far as taxes go, that's public information, and Brevard County's Tax Assessor has a search tool on their website (top right) here: https://www.bcpao.us/paohome.asp

You can search by address, owner's name, and several other fields. Once you find the property, click on the account number and your taxes will be listed at the bottom.

Insurance is pretty easy too. Just about any insurance company has an estimator on their websites. It's not going to be exact, but it should be close enough to run your numbers.

I hope that helped!

@William LaPorte

Welcome to BP! I think one of the prevailing titles that most here have read and comes up about 8 of 10 times on the podcast is 'Rich Dad, Poor Dad'. It's light on actual information, but does show you a new way to think about what you do with your money.

If you want to flip, J Scott's books are a good place to start. They're published by BP and available here.

And of course, there's Brandon Turner's blog post on the subject of books:

http://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/

Happy reading!

@Ismael Reyes

Welcome to BP! Glad to hear that you're already learning new things. Stick around, the learning has only just begun!

Jump in and keep posting, it will lead to networking. Try to find people that are doing what you want to do and follow them. Also, set up key word alerts, you'll get notified whenever someone uses one of those words in a post.

@Billy Rowe

If you mouse-over 'Analyze' on the blue tool bar up top, and select 'Deal Analysis Forum' it will bring to to the forum topic. The description up top has links to the page with the analysis tools page. I'll paste it below, but just didn't want you to have to refer to this thread every time you want to get there.

http://www.biggerpockets.com/real-estate-investment-calculator