All Forum Posts by: Andrew Severino

Another reason prices are higher in coastal area, in my opinion, is beachfront property.  Consumer preference always pays up for beautiful beachfront properties, and likely always will, which again applies economic forces (demand) regardless of politics.  And of course scarcity as you stated already.  The extent that politics affects pricing is limited to the economic policies that are put in place, but these ultimately are economic forces.  And no legislation or policy will ever trump fundamental economic laws like supply and demand, ever.  And the simplest truths are the most powerful, and always prevail eventually.  We can manipulate markets as much as we want, and delay the inevitable temporarily, but it is like a rubber band.  The longer you stretch it, the more violently it bounces back.  This is what all economic crisis' are.  The Great Depression, financial crash of 2007/2008, the dot com bubble, etc.  You cannot legislate reality.  No matter how much you believe a certain policy is "good" or "right", there is always cause and effect.  Fro example, we could pass a law that says if somebody gets cancer, they can't die.  Good luck with that.  The only way to solve this is to cure cancer.  Not with a majority vote or executive order.  Or "good intentions".  As @JAck B pointed out, it is science, and can be measured.

According to S&P/Case-Schiller Seattle housing has appreciated 10.31% in the last 36 months:

https://www.mediacenternow.com/temp/19161_9.pdf?gd...

I am not familiar with your market, this could be a trend that will continue, don't just assume it is topping out.  

Regardless, if you can't make the numbers work from a ROI perspective, buying new rentals is not a good idea. However, if the numbers work, and a an acceptable rate of return is realistic, and you plan to hold the properties, then I would say it is a green light on new purchases.

Appliances won't be factored in a residential appraisal for value.  The primary value new appliances will add for you is happy tenants, and low or no maintenance for you going forward until they start to break down.

Coin operated laundry won'r add any value for just a few units.  The revenue will be negligible.

You're the man @Bill Exeter . Thank you. 

@Dave Foster , thank you. This is extremely valuable information. I appreciate you clearing that up. This opens up new doors. 

Question @Dave Foster: just to be clear, it is ok to take those refi proceeds and do with as you please? Elimination the conundrum many face when they want the capital gains deference but also need some cash for other business or personal reasons?

@Joe

@Joe Fairless I agree. Higher quality properties make sense if the numbers work, even if you have to pay up a little, as you pointed out due to less management headaches. I am currently having to make some decisions on a 1970s apartment complex regarding the potential need for updates and improvements.

Occupancy rates should be higher, tenant retention better, and maintenance costs lower.  For a long term hold, these benefits can substantially augment returns, and less management headaches open up room for additional acquisitions from an operations standpoint.

Thanks for sharing your experiences, looks like you guys are doing very well.

@Spencer Wardwell, I have multiple clients that live in SOCAL and invest in New Orleans through me. In addition to much better ROI, Louisiana is a very landlord friendly state, especially compared to California. One of these clients is a husband-wife team, the husband manages a 7200 unit portfolio in Cali, and the wife is a real estate broker there. And they choose to invest their own money here.

We have neighborhoods here that are up and coming, with upward momentum already established. Feel free to message me or send a colleague request, I am happy to outline some of the details for you.

 How many units do you have? Property management platform Appfoliio, which is very good, will automate this for you and automatically calculate and bill the tenants, and they can pay electronically.  You can do choose to calculate by square footage of unit or number of residents per unit.

@Jonathan Brouk, calculating property taxes is easy, either factor 1.5% of your assessed value (which is usually set at your purchase price with the first payment at that rate due first January after you purchase), or go to http://nolaassessor.com and use the assessor's estimator to calculate your taxes by entering in an assessed value which would be 10% of the purchase price / home value for any residential property with no commercial classification.

As of property insurance I am using 1.3% of my unsure value (again, your purchase price is good for this estimate), and when you identify the property you can get a firm quote from your insurance agent during your due diligence period while purchasing the property.

As for flood insurance, there are many areas of New Orleans that are flood zone X and B, which usually don't require that you carry flood, and should you decide to carry flood insurance anyway these policies tend to be very affordable, around $650 per yeas for a double.  And in other flood zones that are a bit higher risk, policies are often affordable and justifiable by the investment opportunity.

At the end of the day, regardless of the premium costs, the number crunching you do in advance of purchase, as long as it is done properly, will dictate if the costs are too high or not.

I have good contacts for insurance etc., and I have been doing this in NOLA for 21 years, currently owning 74 units.  If you need help or references for insurance pricing message me or send a colleague request, and I would be happy to give you some good fundamentals to quickly assess if an opportunity warrants a closer look.