All Forum Posts by: Matt Donley

I'm trying to put in an offer on a primary residence for my wife and I, and I'm having a really hard time with getting comps to provide a number anywhere near the asking price. The thing is, when the property was first listed, it was listed at 3,024 sf. After I reviewed the town assessment docs, I realized there was a mistake and they accidentally included the square footage of the garage in that number. So the actual square footage is 2,436 sf. I told the seller's agent and she corrected the mistake on the listing. They are asking $259k for the property. (They never adjusted the price after correcting the square footage mistake.) It has 5 acres and is in really good condition for its age. I did a walk through and saw a list of improvements made over the years, and got a good feel for the house. 

This is the house https://www.zillow.com/savedhomes/for_sale/1203339...

From the comps I've gathered, I calculated an average sale price of $88 per sf. The asking price puts the house at $106 per sf. I only found two houses that went for over $100/sf. One had 40 acres and the other had 68 acres. So I think it's really over priced.

I have a feeling that the agent made a mistake when listing the house and calculated the value based on the wrong square footage, and doesn't want to admit the mistake to the homeowner. 

This house would absolutely be worth it where I currently live, but since I'm not familiar with the area, I don't want to overpay for a house that is in a less valuable area. The realtor insists that the house is worth it :) but can't specifically refute my comp calculations... Am I way off here, or should I stick to my calculations? It's a really lovely house! I'm happy to pay slightly higher than average, but not $106!

Thanks Clint, I'll take a look at it!

Hey @Clint Galliano, I'm still interested in taking a look at the expenses you mentioned above if you could send them to me :)

@Clint Galliano Yup, I'm looking at Windsor Hills too. :) Here's my spreadsheet. https://docs.google.com/spreadsheets/d/1v7WsaUPqaWqa_q3LJ2Kk4UB1SW7wKgUaE494iwv2Dpg/edit?usp=sharing

I'd love to check out the operating expense info you have, that's one area I'm not too confident in. Are you thinking about running the rental your self, or hiring a property manager?

 @Percy N. The data I used for this spreadsheet is actually focused in on a specific condo type in a specific community, so I knew I was comparing apples to apples.

@Keith Courtney Good points. I agree, the objective of refurnishing every three years would be to keep the condo looking fresh, new, and desirable. I'm not looking at it from a wear n' tear perspective. 

I've been doing some research on a condo community near Disney to assess whether it would make a good investment property, so I've been compiling data on the type of condo I'd like to buy and recording their average daily rate and how many days over the next few months they are booked. I applied a conditional formatting in excel to create a heat map, sorted by average price of unit:

So the interesting thing I discovered is that there is a clear trend. The units that are priced higher have significantly more bookings 5 months into the future than the lower priced units. So not only are they earning more money per night, but they are clearly achieving a much higher occupancy rate as well. On the extreme ends of the spectrum the higher priced condo earns 300% of the low end unit. 

Now, obviously, the higher rate is generally associate with a newer remodeled unit which is professionally furnished and decorated, so what I'm trying to determine is the sweet spot for how often I should remodel in order to justify the high end price. I'm trying to run the numbers at refurnishing every 3 years and it seems to work out. Is this a common interval for remodeling a short term rental in the Orlando/Disney area?

 No way! Is that a federal law, or a state law? I think that's great news. Thanks!

I'm recalling the pressure I felt while reviewing the mortgage and closing documents at the table when I purchased my first home. What seemed like hundreds of documents requiring signatures and initials, which realistically would take a solid weekend of focused reading to not only get through but to understand. Instead, my eyes were glazed over while someone summarized over my shoulder "Oh, that's just required by the state.....", "These pages aren't important, just look at the summary on this page.", "This just says that you're not going to sue us if blah blah blah". I threw trust to the wind and signed away. I guess everything worked out, we lived there for five years and just recently sold that house.

Is it unreasonable to request the closing documents to review before the actual closing? I've never heard of this before, but it seems like a basic request. I'd prefer to review in private, without any pressure, just to make sure I understand everything without everyone standing over my shoulder. 

I kind of like the idea of evaluating cash flow from a 100% financed perspective, in order to provide an apples to apples analysis on every deal you run the numbers on. Bottom line, the risk of negative cash flow is not being able to handle unforeseen circumstances. If it's positive cash flow, you have a better chance of surviving minor financial challenges.

Thanks for all your input everyone!

@Brad Saari It seems like the way I assess a property's cash flow really needs to tie into my overall strategy and risk tolerance, just as you have explained your own strategy. Your cash flow may be lower, but it fits your overall goal of building equity.