All Forum Posts by: Aleksandar Popivoda

Welcome @Vertrice Jones

Hey @Kyle Bigger, sorry, but I don't see what is the problem at all. As @Brian Burke suggested, you should consider cutting your profit margin in half on a transaction by paying the seller more for his/her property. After the six months of implementing that approach please update us on how is your business working and are you still in business at all. Also, I hope you have the same compassion for your employees and their families as you have for the sellers.  

Nick, good luck with this deal. Just to correct you a bit. What you just calculated is Cash on Cash Return (CoC), not ROI. In order to calculate ROI you should assume the holding period, calculate appreciation and accrued equity and involve Tax consequences. I think that ROI is way better measurement and underwriting technique.

Good luck. 

Nothing new. They will keep pushing the taxes higher until the last productive citizen leaves the city. What happens after will be interesting. 

@Account Closed

Let's start from the beginning of your post. Can you please explain to me how did you come to conclusion that property with 8% CAP rate will yield 8% Cash-On-Cash annual return? That simply isn't true just by definition of these two terms.

 Cap rates don't consider capital expenditures. It only considers annual operating expenses. Cap rates tell you about the "flavor" of the certain market, nothing more. You don't buy based on that factor only. It is something like P/E ratio for a stock. 

@Ross Bernard

I don't see any dishonesty on the contractor's part. This is the cost of doing business. You are not in a position to determine how much overhead is enough for him. Market does that. And based on reviews this guy is doing a great job. 

I wonder have you ever checked the income statements of the public companies and see how much is the percentage difference between Revenue and Cost of Goods. You would be surprised. But that's what business is all about.

Also, only thing that is really immoral in this post is the fact that you didn't pay him for diagnosing the cause of your HVAC problem.   I would suggest to you to call that contractor and at least say Thank You for diagnosing the problem FOR FREE. You obviously put a $0 value to his knowledge and skills. That's a bad practice, my friend. 

??? Sorry, but this is simply not the case. If he has $30k at the beginning of the year and he wants $60k at the end of the year that his return must be 100% in order to double the money.

ROI=($60k-$30k)/$30k =100%

Rule 72 doesn't work for this obvious case. 

Gilbert, thanks for your input.