All Forum Posts by: Derek Kirkwood

Great conference call guys, thanks!

@Marty Sheehan

That would be a nice rent bump.  It might be different in your market but in a lot of places there are just more people moving in the summer, so you would have a larger tenant pool to choose from, compared to the winter when fewer people are moving.  Same rationale for when it comes time to sell.

You mentioned somewhere to upload your spreadsheet.  Not sure if you have looked at the FilePlace but you can add yours there and look through a ton of other stuff people have uploaded.

@Marty Sheehan

Looks ok, like you said mediocre but you have been searching for a year and you have to start somewhere right?

3% for maintenance seems a little low, but you are saving a good amount for CapEx which is good since you know you have roof and windows coming up.

Your spreadsheet calculated a 1% cap rate?  Not sure what math is in that sell but this is more like 6% with the numbers you gave us.  Might also look at making the next leases end in the summer so you get on a summer turnover cycle. 

@Frank Macias  I don't see anything missing.  No problem going conservative on the insurance estimate.  Agree with @David Whartnaby see if the numbers are still good enough paying for management.  Otherwise looks good, let us know how it goes.

@Dave Smith It might be easier to think of two separate and unrelated calculations, Cash flow before taxes, and Taxable Income (or loss).  The results of those two are later reconnected to determine your Cash flow after taxes.

Cash flow before taxes =

NOI - Debt service - Capital Expenditures

Taxable Income =

NOI - Interest portion of the Debt service (not principle) - Depreciation

Now that you have those two numbers you can find:

Cash flow after taxes =

Cash flow before taxes - (Taxable Income x Tax bracket)

You are correct for Cash on Cash return = divide CFBT by total cash into the deal (usually down pmt + closing costs + repairs + holding costs)

Thanks for the recommendations everyone, I really appreciate it.

Renegotiate to a lower price based on information you gathered during due diligence.  If you can't get a price that makes the numbers work then walk away.

In hindsight do you think the "highest and best" was a bluff or do you think there really were multiple offers?

Can anyone recommend a good title company in Ogden Utah or surrounding area?  Thanks!

@Isaac Geller  I can't speak for the all areas of the US but generally phone calls are still done through the traditional phone networks/phone numbers.  I see a lot of people using message apps like whatsapp, groupme, imessage for texting but not really for calls.

Have you tried google voice?  When I'm out of the country I have a US phone number through google voice that I can call any number in the US through the internet and to them it will appear as a local number.  I believe Skype has a similar service.  They are both very cheap.

@Thomas S.  Agreed.  I usually go 7-8% for considering cash opportunity cost based on long term stock market average.  Is there something specific that you relate the 10% to or just a general rule of thumb?