All Forum Posts by: Jimmy O'Connor

I'm selling off some parcels my team owns or that we have under contract.

• 6.6 Acres on a major road within 15 min to Atlantic City, NJ directly off Parkway Exit
• 6 acres of land and/or 50k leasable SF off I-86 in Upstate NY
• 1.46 Acres next to Class A Self Storage directly off Route 42/AC Expressway 10 min from Philly
• 5.93 Acres of Seller Financed Land in Salisbury, MD
• 4.63 Acres in McAllen, TX in an area experiencing high YaY population growth.

Depending on the parcel, I have varying stages of due diligence and site plans which would be included in the sale.
Call me at 609-513-1163 or email me here to get full details on which one you think we should tackle first.

Hey all! 

My partners and I are looking to pick up land specifically for Wedding Venue Development in Jefferson County, CO. Ideally not too far away from Denver Metro but scenic. I was working through the zoning code and it is a little ambiguous on whether I should be targeting Agricultural land of commercial development land.  

Are there any developers or zoning attorneys that are expert in this market? 

zoning resoltuion: https://www.jeffco.us/DocumentCenter/View/1828/Zoning-Resolu...

@Emily R. My team offers lending for short term projects and I have some solid referrals in this market. I'll be reaching out over DM! 

The mayor just signed off on  legislation to that is aimed at tackling the issue of discrimination against households that use tenant-based vouchers, also known as Section 8 vouchers, to pay for their housing. These vouchers are provided by the Philadelphia Housing Authority and are meant to help low-income families afford housing on the private market. However, the resolution states that many landlords in Philadelphia are refusing to rent to households that use these vouchers, making it difficult for these families to find housing. The Fair Practices Ordinance already prohibits landlords from refusing to rent based on a tenant's source of income, including tenant-based vouchers. However, the resolution suggests that source of income discrimination is still a problem. The Committee on Housing, Neighborhood Development, and the Homeless will conduct hearings to examine the issue of source of income discrimination and how it is exacerbating the City's affordable housing crisis. As a result of this resolution, landlords may face increased scrutiny and possibly penalties for refusing to rent to households with tenant-based vouchers. They may also be required to participate in education and outreach programs to learn about their obligations under the fair housing laws, accept tenant-based vouchers, or face penalties. Landlords may also face increased competition for housing stock from households with vouchers, and may experience lower vacancy rates or higher tenant turnover. Overall, landlords may need to adapt their business practices to comply with the fair housing laws and to accommodate tenants with vouchers.

Section 8 landlords and Section 8 adverse landlords, what do you make of this?

Link to legislation: https://phila.legistar.com/Leg...

Hey All!  

For those of you starting out, it seems like terms and equations for rental properties is like speaking another language, especially if you are not good at math. 
I typically type these guides up myself but wanted to see if the New Chat AI could produce.... spoiler alert, it can. 

Here are 5 basic equations to understand with examples as generated by the new Chat AI Robot:

1. Capitalization rate (Cap rate): The capitalization rate is used to determine the potential return on investment for a rental property. It is calculated by dividing the property's net operating income (NOI) by the purchase price (or current market value).
• Step 1: Determine the property's net operating income (NOI). This is calculated by subtracting the property's operating expenses (such as maintenance, repairs, insurance, property management fees, etc.) from the gross rental income.
• For example, if the property generates $24,000 in gross rental income per year and has operating expenses of $10,000 per year, the NOI would be $24,000 - $10,000 = $14,000.
• Step 2: Divide the NOI by the purchase price (or current market value) of the property. For example, if the property was purchased for $200,000, the cap rate would be calculated as follows: Cap rate = $14,000 / $200,000 = 7%.
  
2. Gross rental multiplier (GRM): The gross rental multiplier is a quick way to estimate the value of a rental property based on the income it generates. It is calculated by dividing the purchase price (or current market value) by the gross rental income.
• Step 1: Determine the gross rental income of the property. This is the total rent collected from tenants over a given period of time, before any expenses are deducted. For example, in this sample, the property generates $24,000 in gross rental income per year
• Step 2: Divide the purchase price (or current market value) of the property by the gross rental income. For example, if the property was purchased for $200,000, the GRM would be calculated as follows: GRM = $200,000 / $24,000 = 8.3.
  
3. Gross income multiplier (GIM): The gross income multiplier is similar to the gross rental multiplier, but it is based on the gross income of the property rather than the gross rental income. It is calculated by dividing the purchase price (or current market value) by the gross income of the property.
• Step 1: Determine the gross income of the property. This includes all income generated by the property, including rent, laundry income, parking income, etc. For this sample, the property generates $30,000 in gross income per year
• Step 2: Divide the purchase price (or current market value) of the property by the gross income. 
• For example, if the property was purchased for $300,000, the GIM would be calculated as follows: GIM = $300,000 / $30,000 = 10.
  
4. Cash on cash return: The cash on cash return is a measure of the annual return on investment for a rental property. It is calculated by dividing the annual cash flow (before taxes and depreciation) by the total cash invested in the property.
• Step 1: Determine the annual cash flow of the property. This is calculated by subtracting the annual operating expenses (including principal and interest payments on any mortgages) from the gross rental income.
• For example, if the property generates $24,000 in gross rental income per year and has operating expenses of $12,000 per year (including mortgage payments of $8,000), the annual cash flow would be $24,000 - $12,000 = $12,000.
• Step 2: Divide the annual cash flow by the total cash invested in the property. 
• For example, if the investor put down a 20% down payment ($60,000) on a $300,000 property, the cash on cash return would be calculated as follows: Cash on cash return = $12,000 / $60,000 = 20%.
  


5. Debt service coverage ratio (DSCR): The debt service coverage ratio is used to determine the ability of a rental property to generate enough income to cover its debt payments. It is calculated by dividing the net operating income (NOI) by the total debt service (principal and interest payments).
• Step 1: Determine the net operating income (NOI) of the property, as described in the example for the cap rate above.
• Step 2: Calculate the total debt service (principal and interest payments) on any mortgages for the property:
• For example, if the property has a mortgage with a principal of $200,000 and an interest rate of 4%, the total annual debt service would be $8,000 (4% of $200,000).
  

Step 3: Divide the net operating income (NOI) by the total debt service.

For example, using the numbers from the previous steps, the DSCR would be calculated as follows: DSCR = $14,000 / $8,000 = 1.75.

The debt service coverage ratio is generally expressed as a ratio or a percentage. In this example, the DSCR of 1.75 means that the property generates enough income to cover 1.75 times the amount of its debt payments. A DSCR of 1.0 or higher is generally considered to be sufficient to meet debt obligations, although some lenders may require a higher DSCR.

@Jacques Villars 2% can exist in rougher areas with S8 vouchers and tenants who can contribute additionally to that rent OR if you are close to a military base or university where you can overcharge students

@Chad Gallagher runs a solid company! I would hit him up 

@Immanuel Pierre

I wholesaled and made the people who would give me detailed feedback a priority and then every time I spoke with them I tried to incorporate that feedback to make it apparent I was taking their opinions seriously and applying them. Once they feel as if their words are being valued and acted on (while still getting first dibs on my deals) conversations about real estate and investing in its entirety became so much more casual and their willingness to help me increased because they knew their advice didn’t die at the conversation

Mind you I made a post about these rehabs about a year ago and prices have in fact gone up. ARV's as well but to pretend a 80k full gut rehab in south philly gets it done anymore is just silly

@Dan Sager

Here’s what I’ve been hearing for your standard 900-1200 SF row home here in Philly

Guts assuming no structural, no digging, finishing basement, HVAC, hardwoods, island or wrap around bar counter space, quartz/granite, recess lighting on first floor, add a full bathroom in the basement:

For B class (ex: west Germantown/mt. Airy, south philly, brewerytown): 100-120k ($100-120/sf KINDA)

C Class (ex: East Germantown, olney, most of Cobbs/Kingsessing outside of what is right by baltimore and over the tracks from squirrel hill) 90-110k depending on condition

Cosmetic jobs take the bottom value and maybe put a new range 20k lower. I’m assuming by cosmetic you mean that you are not ripping out walls so you have duct work where you add a condenser, decent electric, Sheetrock or plaster in good shape, plumbing you can keep.