All Forum Posts by: Anuj Khosla

Hi BPers! I am interested in linking up with wholesalers who cover grays ferry, point breeze, and newbold. My partners and I would make a wonderful addition to your buyers list. Please feel free to PM directly or add to this thread. Thanks!

Hello, Hey I thought it would be a good idea to join in the discussion because Abdul King and I have similar goals. I would like to connect with liked minded real estate investors/agents/professionals in the Philadelphia market. Maybe there is some business or overlap in our goals we can discuss and help one another out with. My intentions aren't to high jack your thread or post so it doesn't appear that way. I'm focused on South Philly, particularly in newbold, point breeze, and gary's ferry neighborhoods. As far as financing is concerned I plan on buying cash. I'm also interested in REOs and distressed properties but I mainly like to hold the properties as rentals. What areas does everyone cover/plan on investing in?

BPers, I'm just looking to meet some local investors/property managers/brokers/landlords to discuss the different markets in Philadelphia. I have been touring various properties in west (near university city) , north (near temple, brewery town, Francisville) , and south (newbold, bella-vista, point breeze, grays ferry) Philly. I know it's very large farm area to cover but I am motivated to learn more about each market and the individual dynamics before I invest. If anyone is open to meeting for coffee to talk further I would be happy to treat!

@Account Closed i think you are correct to suggest cap rates could rise in 11 years. Cap rates are low given the current interest rate environment and the federal reserve's nearly decade long easy money monetary policy. This policy has led to a lot of institutional money flowing into real estate which has pushed down cap rates. This dynamic does make me nervous about pulling the trigger on this deal and in real estate in general but as a long term buy and hold investor I think if I buy right and have holding power then I could weather the storms that come along the way. 

Ed Matson Thanks Ed! I'll put together a valuation walk thru with a spreadsheet and a brief summary of the spreadsheet/numbers. Hopefully the owner is a reasonable person and entertains my offer. I usually put a 10 year horizon in my excel model to calculate my ROI, IRR, and DCF. I use year 11 NOI for the sales price then subtract 8% for transactions cost then subtract the balance of the mortgage. I use the same cap rate as I bought the building for, which for this transaction would be 6%. If the IRR is at least 10% then I consider it an investment worthwhile. I tend to be conservative when I model out my numbers. Again, thanks for your help and I'll let you know how it goes!

Joseph Scorese I would love to talk to you further about different financing options you may have access to. I'll pm you shortly with a few questions. Thanks!

@Ed Matson I appreciate the insight on your property's operating performance and it really sheds light on the understated expenses on the current deal I am analyzing. I haven't gone deep into the rehab cost with upgrading the units yet but I'll have a few friends who flip walk thru the units with me and give me rough numbers. It wouldn't hurt to have a GC walk thru as well. I am nervous the market in Moorestown isn't a renters market so finding tenets may take longer. I guess I have to speak with other property owners/operators about that. In terms of making an offer where would you start if you value the property at $3.3M but it's listed for $4.4M, I usually ignore the list price FYI. 

Hi BPers!

I am currently analyzing a deal in Moorestown, New Jersey (08057). I have a few questions about the market, the numbers, and the deal in general. I'll start by giving some background on the market, or the lack there of lol, and continue on to my thoughts, problems, and potential solutions. I am looking for advise/guidance and any pearls of wisdom the community may have will be greatly appreciated. 

Moorestown is predominantly a single family, owner's market (Affluent Township- Early 2000's it was ranked the best place to live in America). They are a few multi-families properties in the town but it is certainly not a renter's market. The school system is stellar and is nationally ranked. The taxes are high and they are going to go higher and higher as time goes on. The problem with such a market is there is not much information easily available on the:  

1) Rental Rates 

2) Vacancy/Occupancy 

3) Cap Rates. 

My potential solutions to the 3 issues are 

1) The internet (Trulia, Zillow, Rent-o-meter, etc.)   

2) Touring the competition (similar properties) Asking them about their rents and occupancy

3) Talking to the current property manager and other local property managers 

4) Reaching out to local real estate brokers about the rental listings and the property in general 

5) Trying to connect with local investors/landlords thru BP and REIA meets 

6) Asking the current owner of the property for the last 3 years of financials before its under contract (probably wont be willing but its worth a shot)  

7) Reaching out to the big commercial brokers like CBRE who have closed transactions in the surrounding areas

8) Somehow get REIS, which is an real estate data and analytic firm to "demo" their platform to obtain more info on the market 

As for now these are my potential solutions that I am working on but I would like the community to help me find other solutions or provide some advise. 

The Property & Numbers

Just a little background on the property itself, its 3 different structures that are all 2 stories 2 bed bedroom 1 bathroom town-homes. The total unit size is 32 and the current parking lot fits 32 cars but there is an additional space located within the grounds that the township as just approve for an additional 32 spaces. 8 out of the 32 units have been upgraded and are currently being leased out at $1500 a month. The other 24 units are averaging around $994.50 a month. The property was built in 1965 and it was built with stone masonry.  

As far as the numbers go, the current pro-forma seems to be a little off. Starting with the Potential Gross Income, the current broker has made a simple addition/subtraction error. The true total is $430,416 but the broker has $442,080. This mistake exist because the broker did not add the rent roll properly. The broker has taken away 5% for Vacancy and then has added in another $7,000 for laundry income. Using the true total of $430,416, the Effective Gross Income is $415,895. The broker has the total operating expenses at $142,419 with the real estate taxes at $51,500, which I think it correct given the township current mileage rate. On the face of it, the operating expenses seem light at 34% of Effective Gross Income. All the podcasts, blog posts, and books that I have read/listen to have told me properties of this size and condition typically run closer to 45%-50% of Effective Gross Income. To be conservative I used 50% on my analysis so the OE is $207,947.60. Then taking out capital reserve of $250 per unit ($8000) makes the NOI at $199,947.60. The broker has decided to use a 6% cap rate and my value for the property comes out to $3,332,460. Just to go over the expenses, 1) The brokers pro-forma does not include turnover, trash removal, permits &fees, advertising, and G&A. 2) The brokers pro-forma is light on the insurance, utilities charges, grounds/landscaping, snow removal, and cleaning. The property is currently listed at $4,400,000 but to me that seems unreasonable given my analysis. How do I approach this situation? Are my numbers off or do they seem reasonable on the face of it? Any advise would be appreciated and if you would like to connect I can send you my excel model and we really dig into the numbers. Thanks! 

Joseph Catalano thanks for the advice! Wish me luck!

BPers, Do you think offering to be an unpaid summer intern for a local property management firm be a good idea? If so how would you approach a company and how would you word your pitch?