All Forum Posts by: Will Barnard

Plutopia,
I hear what you are saying and we can both agree that getting accurate numbers to arrive at a current and correct NOI is very important and necessary to evaluate a property. I still do not agree that cap rates are usless. I will just agree to disagree there and here is why:

Let's assume you shoot for a ROI of 25%, a DSCR of 1.5, and etc., etc. Now let us assume you find an investment that meets all the numbers you shoot for and you purchase the property based on those numbers. As it turns out, the cap rate on your purchase (using the true NOI form the P&L) gives you 9.5. But that type property in that area has an average going cap rate of 10.5! You just overpayed for a property, regardless of the fact that your other figures hit your target. In other words, if you had based your offer on the 10.5 average cap rate for that property, your other numbers would have been that much better.

The example above is long, but I hope I am making my point clear. Again, I agree that cap rates using crap or false numbers are useless, but cap rates with the right numbers plugged in are an essential part of evaluating income producing properties.

You make some valid points, but obtaining an OO loan, then moving out without notifying the lender is fraud. They would have the right to call the note due, or worse, criminally prosecute you.

Also, not everyone wants to live in one side of their rental property. I would not unless I was young and single and could move around with ease.

Ron,
First you miss quoted me. Second, I did not do the following in your post.

I was the first to commend how well put together the education is. How is my tone perpetuated throughout this entire forum? I simply gave my opinion on how the potential investor is left on their own after the fact and the poor quality of the investments in the investor concierge as stated below. This is my opinion and others have their own. As you mentioned, it is up to each individual to do their own due diligence and make the best decision possible from their investigations, not only with NR, but with any topic on this forum. No one attacked you, or NR, simply gave opinions and experiences from them.

There is absolutely no inaccurate information stated above, only a reference to a written article from a major news authority, my opinion on the concierge, and my opinion on how the newly educated investor remains on their own once completing the NR courses.

Originally posted by "Primo_Coach":

Of course it is nice to help people and do the right thing, however our only purpose is to make money. The only purpose of any for-profit business is to make money. That is why you need to monitor your marketing results, track your cost per deal and run a lean, mean real estate machine.

Primo, I disagree. Although your poetry is correct, the ONLY purpose in business is not to make $. Of course it is #1 on the list (we have to make $ to stay in business), it is not the only one. Some people have a specific business because it is their passion. Others, make $, give back, educate, etc. etc. etc.

There are many reasons to be in business. For me, $ is a great motivator, but being a RE investor allows me freedom for my family which is the most important thing in life to me. Yes, I need $ to support them, but it is not the only goal in my business.

Originally posted by "DebtFreeDave":

I just had one of mine cut and my rental property was completly closed. I have about a dozen other clients that had the same thing happen as well.

What is your opinion on the use of a HELOC to invest in RE rental properties since you have been in the lending business?

Granted, the lending market is tightening, but the rates on HELOCs are hard to beat right now.

Josh developed this community for investors and the like, to learn from each other's experiences and knowledge. That is what makes this forum so great. By contributing your knowledge, you may assist others on their path to their goals and in doing so, become the "expert" in your field as Josh pointed out.

I was not asking for a book. Just a few simple answers to why a Virginia LT for our BP community. Many of the "gurus" proclaim the same items you mentioned and our attorney has said otherwise, so I was hoping for some clarification from you.

If you do not want to answer our questions, and only want to charge for them, that is your choice. If that is the case, please do not post statements in which you choose not to validify with evidence. Many of the BP members are newbie investors and the seasoned ones here tend to protect them from the guru nonsense so they are not taken advantage of.
Please keep in mind, I am not calling you a "guru" as I do not know you, simply making a general statement.

Jon, excellent points but I still believe that it is possible to rely on your team members to walk that area and take notes of "a number of run-down, empty houses with boarded up windows and yards overrun with weeds."

My property manager does just that for me, has noted an area with those items you spoke about and thus, we went elswhere. Since I send so much business to my PM, she would be foolish to give me incomplete or wrong info on items of importance to my research. She would stand to lose a great deal. There must be some amount of trust given to team members, although an investor should always keep close tabs.

Also good points Typrider. To be clear, I do not have low income properties (except one) as they do not fit within my investing model. This is not to say that you should not invest in them, many others do quite well with them. For me, and most of my investors, prefer newer, higher end rentals for a multitude of reasons. I have many duplex and 4-plex units (residential multifamily) and using a PM for them has been great. If a PM can manage an apartment building to the investor's satisfaction, there is no reason why they can not do the same on the smaller multi's.

Just my opinion and strategy I use.

That is very interesting. Sounds like Sterling is a quality, safe, and conservative spot for a SDI. I will keep that in mind for some of our clients. Thanks Jon.

Jon - By the way, getting back to some of our previous discussion, what is your opinion on utilizing debt financing in a IRA? Let's use the following info as an example to compare notes:
Property purchase price $100,000 6-15-08
Non recourse loan amount $50,000
Rent = $1400
Debt payment = $350 P&I 7.5% 30 year fixed
Assume OE are $550 monthly
Cash flow = $500 monthly
Sell property for $150,000 6-15-10 (cost of sell is $10,000)

With this example, do you feel it is beneficial to use the debt financing (leverage) and pay the tax (what would the UDFI be by your calculations?) or would it be a better return to pay all cash from the SDI in the amount of $100k?

Originally posted by "azmania":

If you are in an area where you can get buyers, then flipping is the way to go as it is in and out. As for buy and hold, get an area that will appreciate fastest in this market...You can retire early :D

With the lending market continuing to tighten, the increased housing inventory, and the recession, it is much more difficult and "risky" (very loose term) to flip in these market conditions. Of course there is always the exceptions and if you have the ability to buy correctly to avoid/minimize the risk. The other negative item to flipping is the larger tax implications, unless you utilize a 1031 exchange each time. Flipping and wholsaleing is taxed at much higher rates than a buy and hold strategy as the cash flow is taxed at passive income ratios and the gain from the sell (after 365 days) is taxed at long term cap gains rates, currently at 15%.
Jsut food for thought.