All Forum Posts by: Bill Jacobsen

We own 3 beach front condos.  One on the west coast and two on the east coast.  We also own 3 others in the Smoky Mountains.

1.  Management runs 30% to 45%.

2.  Occupancy runs at 50% to 60%

3.  There is income tax, property tax, personal property tax, state, county, and city gross receipts tax.  This all varies by state.

4.  Cap. rate of 8%-10% if self managed.  About 1% to 3% if use manager.

5. Our HOA runs $280 to $767 per month.

6.  Last several years appreciation has been high.

We are continuing to buy more.

Hope this helps.

Bill Jacobsen

I started out doing one project at a time (using all cash) and after 10 years I could do 30 projects at a time if I wanted.  I have used some of the money for buy and holds and loan some money out.

I guess the question is, how fast do you want to grow.  Yes, you can grow faster borrowing money but at a price.

Good Luck.

Bill

After projecting all expenses including maintenance, management, and vacancies your expense ratio looks like it would be less than 50%.  It does look like a good deal as a buy and hold.

Things I don't know: 1. What discount can you get off of price, 2. What repairs are needed to make property rent ready.

Good Luck.

Bill

Most experts believe the stock market is high and will return closer to 6% per year over the next 5 years.  The last 3 years have been great.

I look for rentals that will give me 8% cash flow + 2% to 3% appreciation.

I buy flips which will profit 20% over a 6 months period.

For most deals I have had to invest out of state.

The flip that you mentoned would give me my 20%.

Good Luck.

Bill

The bank is going to start foreclosure proceedings soon.  The homeowner can 1. pay back payments, 2. Sell property, probably a short sell, 3. do nothing and let bank foreclose.

I am sorry that I don't know of other solution.

Good Luck.

Bill

I usually buy properties at 5 to 8 times yearly rent.  You are paying over 17 times or rent is only 5.6% of the purchase price.  I know that I buy cash flow properties and you are buying for potential appreciation.

Unless you are paying mostly cash it is hard to imagine that this property will cash flow.  I guess it would help if you don't charge any of your property management expense to it.

It should be obvious by now to you that I really have no valid advice for you other than pointing out how much you are paying for the property.

just my opinion.  Good luck.

Bill

In my opinion this is not a good investment property. The ARV less 7% selling costs is less than you will have in property.

As a rental at $1,250 rent and 50% operating expense you will be making 5.1%.  I would want to make at least 3 percentage points above my cost of money so unless my interest rate was 2.1% I wouldn't buy.

Just my opinion.  Good Luck.

Bill   

This property looks like a good deal for a flip or a rental.  It would take 2.5 years to make as much money as a rental as it would for a flip.  To me it would all depend on your goals and cash situation.

You have a winner either way.

Bill

I like to look at the cap rate of the property if I owned it then look at the financing separately.  For instance, I will accept an 8% cap if I am paying cash or l am financing at 5% or less.

It is difficult to see what you are doing based on the data you submitted but at an 8%cap requirement I would estimate the value of the property at about $120,000.

Good Luck.

Bill

As a newbie I probably wouldn't have tackled this project.

As is, you are looking at about a 5.5 cap rate.  I don't like to pay full price for improvements that I plan to make.

It is great that a $30,000 improvement can make such a difference in the NOI.

I am surprised that the expense ratio will only be 37% after the improvements.

Good Luck.

Bill