All Forum Posts by: Alex Forest

Quote from @Peter Morgan:

Hello,

I have a 500k mortgage on a triplex @2.5% interest and 250k of cash in sitting in a savings account yielding at 2.5%. The treasury bill yields are getting close to 5%. I am feeling tempted to invest my free cash into T-Bills to completely offset my mortgage interest without any risk.Is this a bad idea? Can I do better passively in a hands-off fashion with other investment vehicles such as syndications in this market?

 What bank is offering 2.5% savings if I might ask? Thanks

Quote from @Bob Reinhard:

wsj 2022 Oct 27
So many investors are scrambling to buy I Bonds, which pay a 9.62% interest rate if purchased by Oct. 28, that the Treasury Department said its overwhelmed site might not complete all the orders in time.

So many investors are scrambling to buy I Bonds, which pay a 9.62% interest rate if purchased by Oct. 28, that the Treasury Department said its overwhelmed site might not complete all the orders in time.

 $10,000 per individual per year limit.  But, yes

@Hannah Ivy
Just make sure you look at the taxes if in the city. Not sure if you are looking in the metro area or city itself. It can add up, just like a townhome that has steep HOA fees and affect monthly cash flow. But of course with an HOA, it at least covers exterior maintenance and repairs. With the city, also be familiar enough with the neighborhoods, it can vary quite a bit. Not sure if you are investing from out of state or nearby.

@Heath Watson The SQ of around 1,750sf seems decent. Is it possible to convert one room within to add a second bedroom to one side (gutted side since already torn up) and possibly both sides (eventually)?  What do typical market rates for one bdm and two bdm in the area look like?  It could be a jump and really improve rental income.  Also agree with trying to make rent not including utilities (can charge back if not seperately metered).  Finally, consider making the offer at 95k but in the offer purchase contract have the seller cover $5k or 3.5k closing costs.  They will feel like they got the asking amount they wanted but it will pencil out for you by getting that amount back; it just might work for you both and make the deal happen.

Good luck buddy, sounds like it could be a good project.

Quote from @Tracie Meador:

I have a building that has six units side by side that will be renovated and rented as studio apartments.  This is in a rural area - was formerly a motel.   Zoning is residential.  This is somewhat of a unique property and trying to figure out if this requires a commercial appraisal or residential appraisal.  What are pros and cons of both?

 Whats the purpose of the appraisal, will it be for lending? I think you will need a commercial appraisal if over four units unless they are going to become condos. Residential wouldn't apply. And the commercial lender you would work with should have the appraisal done (if it's the same as residential where the lender would likely want their own commissioned appraisal done).

Quote from @Ryan Sawyer:

Do all Property managers charge the one month rent charge?  We have a PM that charges the 10% a month but also collects one months rent with each new contract.  Is this normal, and if not, how do I get rid of this? It really cuts into the cash flow of the property.

 Have you called around to other PMs?  Sometimes if you find your own tenant, they will not charge that (of course that is work on your part). The one I have used charges a half month if they place them, and no charge of I do the work. 

When your PM places someone, do they start showing or getting it filled before the existing tenants move out or do they wait till it's empty?  How long is the vacant between turnover?

@Klavish Faraj

5% Are you sure?  They are up around 7% for a primary now and higher for investor loan rate this week.

This was my thought as well reading through, similar to Jais post above. John,  Are you referring to the county appraised value?  For commercial, that isn't how they are valued for the purposes of estimating value and for getting a commercial loan.  They will look at income and expenses and net operating income as well as cap rates, etc. It isn't clear if the owner is using that approach either or also basing it on the county appraisal.  

Why don't you approach a bank/lender and meet with a broker or lender that does commercial loans.  Ask them to take a look as you may be purchasing and see what they put together  it could be insightful.  Ask them how much of a loan you could get up to what amount, and there could be limits or bounds. That could inform value fom that perspective.

How scripted are the questions versus dynamic on-the-fly and impromptu?  Or is it somewhere in between whereby there are prepared questions, but they serve as a loose guide and roadmap but you let yourselves diverge from it? 

Was this approach (to above question) the same for you, Brandon, and Josh or were some of you more loose than others with the planned path of the interview dialogue than others?

How much do you and your cohosts share/collaborate on these questions to cover before the podcast and how much does behind the scenes staff help with this, or do you come independently mostly with your own?

This is pertinent to the discussion

(source: calculated risk)
The Case-Shiller Home Price Indices for “July” is a 3-month average of May, June and July closing prices. May closing prices include some contracts signed in March, so there is a significant lag to this data.

The MoM decrease in Case-Shiller was at -0.24%. This was the first MoM decrease since February 2012, and since this includes closings in May and June, this suggests prices fell sharply in July.