All Forum Posts by: Ari Hadar

@Adam Steinberger

Running numbers only the deal makes sense if it fits your investment criteria. That’s your call. Make sure that the “soft” side of the operation makes sense: potential rent, local market and demographics, local crime rate, tenant quality, etc. and make sure to account for reserves.

So accompany the excel calculations with worst, average and best case scenarios. Make the spreadsheet relevant to the real world by understanding the nuances of your local market and modify your underwriting accordingly.

And if it fits your criteria then it’s a good deal.

Good luck!

@Russell Williams

Congrats on a great investment. Arvada is only becoming more popular. Based on what we're seeing in Denver right now (~3 weeks of inventory, median <6 days on market), I expect 2021 to be another hot year for real estate.

People continue to move to Colorado. US News ranks 4 of the top 5 best places to live in the US in Colorado! And, the Denver Metro Area has appreciated 49 of the past 50 years, with an average around 6% while the national average is 3%. Past performance is no predictor of future results, but historical and present data suggests you can count on future appreciation.

A lot of people are wondering about a looming foreclosure crisis, but the data does not suggest that happening. 

Approximately 8% (90,366) of homes in Colorado are in forbearance. Of those 90,366 homes, only 5% (or 4,518) are delinquent. This means 0.27% of all homes in Colorado are delinquent. Even if all those homes came on the market at the same time, it would only add another 2-3 weeks of inventory.

Based on all this market data, I don't expect a crash and if anything, the future looks stable for real estate. Of course, I don't have a crystal ball.

More importantly, I would consider your present situation, for the good reasons @Greg Scott points out: 1) You want your equity working for you. You have quite a bit of equity sitting idle in your house. 2) Appreciation is speculative and only capitalized when you sell/refinance. You have a great opportunity to do that given the reality of today's financial and real estate markets.

Given the current interest rates and strong market, you have two great options:

1) 1031 (sell and avoid capital gains tax if the $ is reinvested) your property into another investment, possibly with more doors that cash-flows at a higher margin 

2) Refinance and pull out $ through a HELOC for a downpayment on another investment property.

It's worth emphasizing the opportunity of the present moment: Interest rates are at historical lows. Even though prices are higher, what you can actually afford may be greater. Such dramatically low interest rates lead to significantly smaller monthly mortgage payments.

Thanks, let me retry with the brrrr calc. 

I believe youre referring to the 2% “rule”?

The deal appears to cash flow well which is what made it attractive to me. I’m not nearly as bullish on the appreciation side of deal, as I factored into assumptions. 

You’re right that the neighborhood seems like a solid C area. This prop specifically is in Tulsa OK. I’m still learning more about the area to find out if this is a location I’d like to invest in. 

Thanks for the insight! 

Just some thoughts:

- If you're paying all cash then Refinancing, use the BRRRR calculator. This will show purchase ROI then "post Refi" numbers and give you more accurate numbers. Your closing cost of $2k is good for cash, but would be low if your financing the purchase. You will also pay some sort of Fee for the refi and the brrrr calculator reflects this.

- Are you confident with the taxes number you're using? Seems pretty low...But not sure your market.

- Overall, this is almost a 2% deal..2% deals should always be high cash flow high ROI. Most likely at the tradeoff of C,C-,or D location, I'd assume?

- Your constants are pretty good, definitely conservative. 

- Numbers all look good, if you're confident with all inputs and location.

@Jim K.@JD Martin@Steve Vaughan@James Wise  Hey just wanted to tag some of my favorties BP buddies.

from my point of View personal residences have been very very good to me..  So I will say it depends on what part of the US your in.. mine were in the Bay Area and Portland.. What the gurus dont mention is the 500k tax free exemption for married couples..  And in both of those markets this has happened to hundreds of thousands of folks and myself included..

If I lived in areas that historically dont really appreciate especially bigger older homes.. then i would look at it completely different.

Plus for me its not math or whats best.. I just dont want anyone telling me what I can do in my home.. or when landlords decide they want to sell and One would have to move.. moving is as we know a royal pain.

Even at that we tend to move every 8 years like the average American but we take advantage of that 500k tax free when we do..  you dont have to 1031 to get cash you dont have to worry about recapture etc etc.

So thats one side of the coin. For good bad or indifferent home ownership is the back bone of the US.

You probably wrote the best answer... It depends.. 

Your options are endless... you have to decided what you want to do. I would also say, go talk to other banks because that loan does not look like a good deal. With our local banks we are able to get 80% ARV, 5-6% interest, over 20 years.

I am foreigner and before Covid they lend 70% ltv and i am taking asset-based loan, a commercial loan.... I am trying to reach out to other lenders... 

@Stephanie Barthelemy, so far you have received great advise! I echo those who recommended to find a property manager first. If they are a good one, they typically have many of the other contacts to build your team.

One other piece of advise I haven't seen yet is to join the local REIAs and join several REI Facebook groups for Baltimore. I invest in Indy but live in Denver. I got lucky that there is a specific fb group for OOS investors in Indy. Maybe you can find something similar for Baltimore.

Before I bought my first property in Indy, I visited for two days and had my schedule packed with different PMs, Realtors, and a few contractors. The professionals in Baltimore will likely take you more seriously if you meet with them in person. Of course that is is harder to do now.

Best of luck with your OOS investing endeavors, feel free to contact me with any questions.