All Forum Posts by: Bethany Fannin

This is exactly what I was wondering about. I am reading several books that seem to be popular/recommended - of course, I believe they were written by the creator of this website, so naturally they would be recommended by this website - and I am trying to decipher whether they are universal principles or things that worked at that particular time for that particular individual.

As far as @Henry Clark 's suggestion that I narrow my focus to exactly what I can do now - I appreciate that perspective and will not bang my head against the wall about this topic. I am not yet ready for commercial investments, but I will be one day and figured there is no reason not to start learning the basic principles about cap rates today. However, maybe this is something I should set aside for the future so as not to be overwhelmed as you suggested! I appreciate the time you've taken to respond to this and will follow your lead!

So he's not saying to pay for all of the value you will add - simply that you might pay a bit more than it is worth today because you know you will be adding much more value?

I guess I would think you would always want to fight to pay as little as possible? Or is this a situation where you would do this only if you would lose the deal otherwise?

I am relatively new here, and I am in the process of reading Brandon Turner’s The Multifamily Millionaire vol. I (it’s also credited to Brian Murray, but it seems that Brandon has mostly written vol. I and then Brian might be more involved with the writing of vol. II).

In Chapter 9: The Multifamily Millionaire Model, Turner explains how you can use the cap rate formula to increase your ability to make wealth.

He explains cap rate and how it is related to NOI and property value, which all made complete sense to me and was incredibly interesting (I love numbers).

However, he starts to talk about how you may sometimes overpay for a property because you are not necessarily worried about what the property is worth today but about the “long-term play.” This is what he says verbatim:

Notice that, based on a 5 percent cap rate, the property is worth only $1,228,600. Then why would you consider paying $1.3 million for this property - $70,000 over value? Because of the long-term play. You know the property can be improved. You don’t care as much about today’s value, because today’s value doesn’t tell you about the property’s possibilities. Some investors might think you were crazy for buying this deal for more than it was apparently worth. You’re not worries because you didn’t buy it for today.

This doesn’t quite make sense to me, because why would I pay someone else for the value that I am going to put into the property? Perhaps it is different when it comes to commercial real estate versus residential, but if you are going to renovate a SFH or even a MFH, you wouldn't pay more for it because you plan to improve it - if anything you pay less?

When I searched the BP Forums for "commercial valuation" and "commercial value-add" I saw some information about people finding deals where the seller wanted to sell a commercial property for when it was "Stabilized" - but this seems slightly different than making improvements that go beyond filling vacancies.

Obviously I have far less experience than Brandon Turner! And, to be honest, I am not even in the process of looking for a 4+ unit property (yet), which is what this section is referring to, but it drives me nuts when I read something I cannot understand.

I am not yet, I was in the stage of educating myself and have been networking at my local REI, but obviously they mostly work in Raleigh. I would love to chat, just sent you a message!

 That is exactly my plan! Thank you for the suggestion, I am reading his book "The Multifamily Millionaire vol. I" right now!

 Thank you so much! This post is super helpful and thorough. 

I was about to post a similar question, so thanks @Connor Golden for your post! Although I'm a bit older than you I am also getting started in this area. We do have a great local REI, called TREIA (www.treia.com) that meets several times a week if you're interested! It's been incredibly helpful to me so far, I've already had coffee with a couple of awesome investors who have been generous with their time and knowledge.

Hello everyone!

Full disclosure - I already posted here a couple of weeks ago, but got locked out of my account. So, I've had to create a new account. 

Anyways, I am a single mom of a 2.5 year old little girl, and at the age of 32 have finally gotten to a place where my financials are in order (I graduated from college a bit later in life after teaching acting and producing plays throughout my 20s!). I work in IT but have found the corporate world doesn't fit my independent spirit. I also want to be able to spend more time with my daughter and be able to pass something onto her and future generations, something I'm sure many can relate to. 

Since currently we are saving money by living with my parents, I would be hoping to use my first purchase as a place we could also live in. I plan to follow "The Stack" method laid out by Brandon Turner in "The Multifamily Millionaire" vol. I. 

I'm considering investing either around King's Mountain (or other areas on the outskirts of Charlotte) or near Jacksonville or Burgaw on the coast. 

Thank you in advance for taking the time to read this!