All Forum Posts by: Brendan Blake

BPers,

Wanted to touch on the broker fee issue. Just moved to NYC and was planning to buy an investment property in the near term 6-12 months. I have my IRR models based off of a previous city that has significantly lower broker fees and I was wondering if anybody has had any luck finding reduced fee brokers in Manhattan or has even found a way to avoid them altogether and just use a Real Estate lawyer to run paperwork back and forth. I can't seem to make the numbers work with such a high capital expense right off the bat in year 0. I don't have real estate license so my access to MLS would be minimal.

Thoughts and suggestions??

Brendan

Say I have this example

Rental Property: $100,000

Loan Amount: $75,000

Loan Rate: 5%

Years: 30 Year Amortized

Monthly Payment amount: $402.62

LTV ratio: 75%

My money is being put to work in two ways, 1) creating a pos cash flow 2) building equity in an asset. Obviously cash on cash return is decently easy to calculate but I find the equity return to be harder to calculate. Say that the property appreciates 1%, how do I calculate the return on the mortgage payoff, obviously less future interest is needed to be paid because the bank now owe less of it and since there is an appreciation in the home my equity I'm building is then worth more.

Any formula that would delve into this would be appreciated.

Was wondering if anybody had a recommendation for a buy and hold real estate software. I currently use an excel doc for the cash flow calculations but was looking for a more formal software that is top notch

@Bill Exeter @Aaron Montague @Brian Mathews

Thanks for responses. So wouldn't it make sense to take on a shorter mortgage initially (with higher payments). You don't get taxed on your cash flow from your property because the higher mortgage payments eat any profitability you would have. The rental income instead basically flows pre tax to the mortgage company. Once you find another property you like you then refi the equity you built up and make a leveraged purchase on your new property with untaxed rental income you have basically stored.

Newbie to the site and was wondering if someone could shed some light on the pros and cons of instead of taking positive cash flow out of the property, to in turn use a shorter term mortageg with higher monthly payments. Excess cash every month would essentially pay off more debt in the property and then use a 1031 exchange to move to a bigger property, all with the hope of avoiding the tax man. Anybody have any insights if this is the best way to grow a portfolio?

Hello,

New to the site, but not new to investing in the equity and FI markets. Was curious as to how you seasoned Real Estate investors analyze potential opportunities in the crowded coastal area (LA/SF/BOS/NY) where even the 1% rule is almost non-existent. While physical real estate for rental income purposes offers less correlation with the broader equity markets than REITS, at what point do the yields that REITS offer become more attractive financially than the physical direct investment?

Hi All,

Was hoping if anybody had some recommended stories on what they look for in a floor plan. To me I would think there could be extreme value in a property, that due to its current engineering allows for less than the 2% rule, but with careful and thoughtful reengineering (adding a half bath, closing off a big room to make 2 rooms instead…etc,) you could accomplish that the 2% rule with the added boost in rental income that not everybody would be able to vision.

That being said let me pose the question that I hope will initiate some discussion.

Has there been a time where you bought a less than attractive investment property and were able to change the dynamics of the floor plan with regards to beds/baths in a way that allowed for a substantial increase in rents? If so, what was you process in analyzing if the process was worth it and the actual costs associated with the changes?

All the best
Brendan