All Forum Posts by: Dustin Beam

Hi Santos, glad to see you're still pursuing real estate! 

Thank you for the advice, we will consider that if needed. Of course I'd love to avoid that, but agree it would be worth it if necessary. 

We really just need him to reevaluate the CAP rate. The appraiser provided a 10 year table showing cap rate changes on A-D classes. He only shows a compression of 0.25-0.5 percent from 2012 to today. That is crazy.

Hi Everyone, I did attempt to search for this within the "MF and Apartment Investing" forum specifically, but that function either doesn't exist or I'm too dumb to figure it out :) . I got a lot of results in a general search about SFH, but don't think that will apply directly. So I apologize in advance if this was discussed recently.

My partner and I have a couple complexes (16 unit and a 32 unit) that we are looking to do a cash-out refinance. The appraisals came back where they used a CAP rate of 7.5% to value the property. We felt that was a high CAP rate in the current climate. I reached out to a person I know who works as in investment sales at a local broker and asked his opinion on that rate. He said that CAP rate is basically unheard of right now.

My plan, as of now, is to pay him to provide "comps" of similar properties in the area showing that current sales CAP rates are lower these days and cross my fingers and hope the banker and appraiser sees it my way. I also get the feeling that it may not work.

Any advice on the best way for me to challenge this appraisal?

Thanks!

Dustin
 

 You're not wrong, but I'm not chock full of either. I'd much rather have too many deals than with not enough money than the other way around haha. But the reality is I need to work on increasing both leads and capital generation. 

 Financially, it's been fine but I didn't quit my W2 until I had replaced my income. Some might say I should have kept working, but I had come to despise my work life. It was an emotional /psychological decision, not a financial one. On the flip side, I did better with some flips than I would have if I kept working. I wouldn't have done the flips if I was working a job, so new opportunities presented themselves because I wasn't working. 

Can I repeat that? I don't know. The hardest part for me is trying to decide which direction to point my ship. I have extended dead periods between purchases due to either lack of deal flow or lack of capital. So I need to decide what to do to either build capital, increase deal flow, or both. Something to consider for yourself if you don't already have those answers. 

 Oh, I probably worded my previous post poorly haha. I was an engineer for longer than 4 years, about 12 years total. I started RE investing in 2016. So I worked full time as an engineer and an investor for 3 years. Then for 1 year I worked part time as an engineer while I continued to invest. Then finally I quit being an engineer. Hope that makes more sense! :D 

Now, I'm still figuring that out. I partnered on a couple house flips, but otherwise still working through how my life will go. Time will tell!

I invested for 3 years as a full time engineer and went part time after that (30 hrs/wk). Did that for another year and quit entirely last summer. 

Being dishonest was never a consideration, FWIW. Just curious the best way to approach them when I'm still setting myself up for the next purchase. Wasn't sure if they would be receptive or if it's typical for them. 

Sounds good, thank you. We'll likely be looking for anything from 12-50ish units, really depends on how closely the two are refinanced and what kind of deals we are able to find.  I'm always transparent if asked so if they want to know my situation, I'll let them know. I just don't want to go into a situation where they all think I'm another BSer giving them a call. I imagine that happens often to them. 

My partner and I should be able to refinance both properties to pull out our initial down payments, and possibly some extra. We are planning to roll that money towards the next purchase. I'm not really interested in sponsoring or investing in syndications. That might change in the future, but for now, just JV deals.