All Forum Posts by: Allan C.

@Remona Castle does your ARV reflect current market conditions or a couple months back? You may be more underwater than you think, which may guide your next steps.

@Allen DeRolph I’m concerned that your deal underwriting isn’t very robust. I’ll have a hard time trusting an agent that says you have a $3M property that you can get at $2.3M. If this is your first deal, I’d focus on partnering with someone who will help with underwriting.

Is the $3M valuation based on market rents with lots of capital improvements required? Beyond acquiring the property, how do you plan to fund the improvements?

@Rob Chiang like all the other sellers out there, you haven’t adjusted your expectations to the interest rate environment we are in. You need to adjust your prices significantly… not $10-50k, but $100–200k+.

When I see sellers listed at comps 5 months back I don’t bother placing offers cuz it seems futile.

@Ricky Burton spread is simply the difference between two values. It can be a spread of buy vs sell, cap rate vs interest rate, interest rate vs treasury bill, and infinite more combinations.

You’ll need to provide context of your transaction - is this a flipper, buy/hold, etc…

@Jonathan W. Markets are efficient and all great investments eventually get crowded with people seeking yields. Over time returns eventually are proportional to risk, effort and barriers to entry.

@Kyle Curtin I use the pro-forma to guide my negotiating strategy with the seller. If the pro-forma is substantially off from my underwriting or T12, then I put higher odds that seller will be unreasonable during the negotiation process. I'm today's market I also don't bother putting in offers with inflated listing prices/pro-formas until after 30 DOM since seller is out of touch with the reality.

@Julio Gonzalez I don’t think your suggestion of making the property your primary residence to completely avoid cap gains is correct if you rented the property before making it your primary residence. There is a pro-rata formula that determines your cap gains obligation in that scenario.

@Michael Creamer depreciation can go a long way to offset your rental income. How much additional income are you looking to shield after netting interest, opex and depreciation?

@Julie Marquez we maximize deductibles and don’t file claims unless cost is 3x deductible or more.

@Cody Lindstrom have you considered the impact of pre-productive capital deployment during the long build process? I suggest performing an IRR or NPV calculation to determine if this is the right strategy. Zero cash flow for the first 1-2 yrs had a very large impact to investment economics.