All Forum Posts by: Devin Beverage

Thank you @benleybovich. I knew that larger apartment complexes were evaluated differently, but I didn't know that it would also be the case for, say, a simple duplex among single family homes. Thank you for your answer!

When determining whether a multifamily property is over or under-priced, how should comps be considered? 

Ideally I would image we would try to compare them to other multi-family homes for sale in the area, but if there are none and we have to go by single family home values, how do we evaluate whether or not the multifamily unit is a good deal or not? 
For example, for a 2 bed 1 bath (each) duplex, would we divide the sale price by 2 and compare to 2 bed, 1 bath homes in the area? Or would we compare the whole sale price to 4 bed, 2 bath homes in the area? 

Well... I'm completely new to this, so please take what I say with a grain of salt. I do need practice, though. 

Without counting your three months in the summer at substantially higher rent, paying $395,000 for it wouldn't even satisfy the 1% rule, would it? $3500/month. June-August, +$4,500/month. That would average out to $4,916/month, and a total of $55,500 in rental income for the year. Then.... 

Prop. Mgmt. could be between 10-15%, but we could say 12.5%. Equates to -$6,937/year, so we're down to $48,563. 

Maintenance I tend to see estimated at $3,000/year, but. Saying it would be 7% of rent every month would take us to $4,129/year. $44,434. 

As far as utilities I have no idea, really... I actually am not sure if there is typically the expectation that the tenants pay for their own utilities or not. I'll just leave this one alone. 

As far as financing, I'm not sure how you plan to accomplish it. This would be where the bulk of your money would be going every month most likely? If say, you were doing 20% down on a 30 year loan at 5%, monthly mortgage should be around $1696/month. That doesn't include property taxes, mortgage insurance, and anything extra. That would take us down -$20,352, so to $24,082 (still speaking in terms of yearly profit). 

Then again, you're considering a starting bid at $395,000, so you could have financial means way beyond my imagination. 

My lack of including utilities leaves a big void, but like I said, it's something I don't even know how to estimate too well right now. To just take a shot in the dark, if utilities were $1,000/month, we would end up at $12,082, or a net positive of around $1,007 per month. 

If I didn't feel that I'd estimated out-the-yin-yang already I would try to do COC ROI, Total ROI, and Cap Rate ROI.

Also, if it's an auction, you're going to be headed above your starting bid anyway. 
How'd I do, everyone? 

Wow, "special assessments." The plot thickens! So low to mid-high condos are clearly out in most cases, whereas very high-end, luxury condos are very lucrative. I'm so excited about the wealth of knowledge I'm getting in my first day in the forums. I never would have guessed there would be such a helpful and responsive community out there for real-estate investors. Right now I'm just eager and super enthusiastic about learning all of this stuff, but I also look forward to when I'll be able to be just as informative and supportive to everyone else once I've gotten my real-estate-legs. 

By the way, could someone give me the low-down on how we get the "@Name LastName" to turn into an actual tag? It doesn't seem to be working for me whenever I try it.

Gilbert, where could I find apartments for sale through a real-estate investment group? That sounds good.

Thank you for doing additional research for me, Jean, I will have to try similar research tactics. An additional $400 per month is enough to completely change things, especially when there's always the possibility of special assessments. 

Bob, you're a little over my head with seller financing. I've heard the phrase numerous times and intend to research it more, but I don't have enough of an understanding to be confident in discussing it. I feel like I read about the topic in Rich Dad, Poor Dad, though, and recall it being conveyed as a relatively low-risk venture. Then again, risk is relative. Thank you for your suggestion!

Thank you, Christopher. I appreciate the real-world example! That gives me a whole different context of considering HOA's. Before I had just considered them the source of an arbitrary monthly recurring fee. I think I've already learned to be wary of condos...

Thank you so much for your input, Gilbert, Nazz, and Aaron. I can understand why condos would not be worth as much or increase as much over time, seeing as there are even more uncontrollable criteria than in single-family homes. It's unfortunate to me though, because I have always liked condos, but the general population prefers owning a home. Would the same also be true for du/tri/quadriplexes regarding progressive decline in value and less appreciation?

Is it more that you don't own the whole building/property with a condo, that they face more wear and tear, or that demand is declining over time that makes condos so much less lucrative? 

I noticed you're from, Chicago, Gilbert. Is the same condo-phenomenon also true for the high-rise apartment buildings that I love so much in major cities like yours?

Each unit is rented for $925/month, and each unit is ~$50K to purchase. I've contacted the lister for more information about HOA fees, utilities included/not included in rent, management costs and am awaiting feedback so I can construct an NOI analysis. Property taxes ~$1,122/year based on county website.

I don't know a whole lot about the area because while I'm familiar with the city I won't be moving there for another while yet. Part of my goal with my first real estate investment(s) is to live on a property that I also rent out (such as duplex/triplex/quad). The area is mostly surrounded by single-family homes, not too inundated by condos that I know of. 

The area is projected to appreciate more than Tampa's average projection over the next year (7.7%), but I see that condos don't appreciate as well as you stated. The competition from bigger corporate complexes makes sense to me, too. 

I'm completely new to BP, the world of real estate investing, and all the math and strategizing that's involved, but I'm determined to make REI a major aspect of my life in the long term. To prepare myself I've been looking around at the different real estate listing sites, various places teaching "the basics," and trying to scout forums to eavesdrop on pros living the dream (which is how I found BiggerPockets).

I'm really excited to get started, but I don't want to get into something prematurely over my enthusiasm, so I'm taking my time to make sure I know how all the finances and rules work. If you know of good places to get comprehensive lessons on what formulas I should know, books that teach real-deal laws, rules, etc., please point me in that direction!

Anyway, I have seen several properties in my target area that are listed as "tenant occupied," where the rent (when they give that info) meets the 1% rule, the listing price for the home is below Zillow's "Zestimate," and the tenant has a good amount of time left in the lease. I've selected two (same condominium/complex) that look to be in the best shape to use as an example for general things to pay attention to when searching for investments, and I'd appreciate some advice. I'm not looking to buy these two units (unless they're still on the market in 3-6 months when I feel I'll be ready), so I'm not asking anyone to do my homework for me. I just feel that the real world example is most beneficial for my understanding. These are the two properties:

http://www.zillow.com/homedetails/1910-W-Sligh-Ave...

http://www.zillow.com/savedhomes/for_sale/45039750...

I have one main question about them, and it is: Why not buy this? Why would an investor look at these two properties and say, "Not a good deal." ?

They are turn-key, already contain renters paying a decent amount for rent, they have security deposits that would transfer to me, the "Zestimate" (however reliable that is) is far higher than asking, the Tampa, FL real estate market has projected growth over the next few years, the units look like they're in really good shape, and both units are at the same address. In danger of sounding obtuse, I'm still inclined to ask why anyone with this area in mind, and the proper capital, would not buy them. 

I understand that there is considerable risk in any investment, plus additional costs to worry about besides the mortgage, plus anything and everything that might break during the tenant's lease, plus the potential stress and hassle. In general, though, what should one be looking out for with deals like this? Perhaps it's just because I'm a novice, but this looks like a steal based on given info.