All Forum Posts by: Alicia W.

Quote from @Scott Albritton:

Assuming $4,400 in monthly rental income = $53,800 for the year. At $600k, you'd be at a 8.36% CAP RATE this wouldn't be taking into account any other income from the property..

What are typical CAP RATES for the area? General rule of thumb, higher the CAP RATE, higher the risk. Not always, but very common.

$550  / mth * 8 unit = $4,400 * 12 mths = $ 52,800 GRI  ****not $53,800****
The formula for CAP = NOI/Price
NOI = [GRI - V&C loss + OI] - EXP  *****You did not subtract for expenses to arrive at NOI nor include a vacancy and collection factor****
Assuming expenses are 50% and 100% occupancy (which 100% occ is not realistic all the time). Also, zero leverage (ie: no loan)
$ 52,800 * .50 = $ 26,400 = NOI
CAP = $ 26,400 / $600,000 purchase price
CAP = 4.4%  (NOT a good return considering you can yield higher returns elsewhere in less risky investments)

Be on the look out for our new friend we met yesterday morning during our beach walk (PCB) 🦈

A new apartment building is set to rise in Panama City Beach, thanks to a $72M loan secured by Oldacre McDonald. As our beautiful city continues to grow, so does the demand for housing, jobs and investment opportunities. 

https://tinyurl.com/256w4aau

#PanamaCityBeach #RealEstate #InvestmentOpportunities #Growth #HousingMarket #PCB

@Jay Hinrichs - I'm inclined to believe lenders will step up to the plate and offer the ability to incorporate buyer side commissions into the mortgage payments in certain situations. Yes, valid concerns about VA loans. My husband is a 20 year retired USAF vet.

You need to compare levered versus non-levered DCF and determine whether the IRR is 1.) greater than 0, and 2.) greater than your RRR for the investment.

What would be most helpful to me when I underwrite commercial opportunities (assess the value and risk) is to have someone who possesses local knowledge and has experience preparing a comprehensive market analysis; levels A through D, depending on how in depth I want to go. With the volume of opportunities we underwrite, it's not feasible to visit geographically dispersed properties until more information is gathered (ie: market analysis) and the property meets our specific investment criteria.

I own an LLC that acts as a management company for my rental properties. All revenue and expenses are channeled through the LLC (management company). As any investor knows, it is wise to seperate ownership via different LLCs, land trusts, etc. of properties to limit liability exposures (one lawsuit against a single property does not place all properties at risk). My tax professional is telling me I am not able to depreciate the rental properties through the LLC (management company) if the deed is in another LLC, land trust or my personal name. Can someone please advise how/where I am able to depreciate them since they are solely used for business purposes?

@Erik J Courson

 It is normal for "snow birds" to rent for several months during the winter/off season. They usually arrive in November and depart end of February before college spring break begins in March. Snow birds are typically great renters. They will return to the same rental year after year and refer to it as their second home. They don't damage the place and, quite the contrary, treat it as if it were their own home repairing minor things on their own because they simply can and enjoy doing things. They make friends whom they look forward to seeing each year, have socials (card night, pot luck dinners, dances, Valentine's Ball, noodle time in the pool, etc.) You would be missing out on a great opportunity if you forego it. Do you research and come up with a fair price. It is better to have some income to cover the ongoing expenses versus none.

I have always registered my own LLCs and S-Corps, and applied for FEIN online. There is no need to pay an attorney to do something you can easily do yourself; however, I only suggest doing this if you are the sole owner or your "partner" is your spouse.

If there are any outside partners or stock holders, you need to have a professional attorney draw up the appropriate contracts clearly stipulating buy-out agreements, grounds for termination of any agreements or contracts, distribution of profits, etc.

I'm a little unclear if you are stating there is existing water damage or you are afraid there is a possibility of future water damage due to freezing pipes. If you are inquiring about obtaining insurance to cover preexisting damage, the answer is no. The underlying principal of insurance is to provide indemnity for a future and unknown loss. If you are seeking coverage for the possibility of freezing and bursting pipes in the future, yes you can procure insurance to cover you beginning at the time you take ownership of the property (closing). I hope this answers your question.