All Forum Posts by: Federico Cantero

Thanks for your comment Charles

Good afternoon. We are developing the financial numbers for a Large CONDO project in Puerto Peñasco in Mexico, Near the actual projects of Mayan Palas Hotel and two other CONDO projects called Encanto and Luna Blanca.

So far the legal aspect and construction financial structure are sound, but we need extra info on the demand side, specially from Phoenix and Tucson (Natural Markets for the CONDOS)

Does anyone have some webpages or statistics that can help me see what is the current demand on this two cities for Mexican condos with Beach front? 

Once the project goes ahead I will be posting on this same site the details and will be searching for Brokerage help to sell the condos.

Big appreciation for any help. 

@Immanuel Sibero and @Steve Vaughan

Thanks for your comments.

Immanuel. I get what you mean, probably single home was not the best BASE LINE to use in my comment. But let's say that we go with your method, you only use Benchmark to sell. That's OK to establish price, but my interest is not on correctly establishing a selling price, but on timing. What metric (rule of thumb) will signal you personally that is time to sell on your own strategy.

So far I have been using Tenant Cloud now for 7 properties and So far so good. My tenants are OK using the App on their phones, the people working as Maintenance, Landscapers and else are already used to it so my thumbs up for this App. I would definitely recommend it. 

Good morning. This is a question that I constantly make myself and probably will be a good one to know other people mindsets over when to sell or keep a property using Cap Rate as a guide. 

So, please let me know, in your market area, what is the current CAP RATE for lest say Single Home Rental and at what CAP RATE you would consider selling the property and why?

In my case, CAP RATE average in my area is 8.2% and I would consider selling the property if appreciation pushes my CAP RAT to 5%. This will signal me that my money is better off being re-invested.

@Nate Nook, I must say that so far I have 4 doors and still using Excel sheets. Y tried (the free version) some of the options mentioned and I found more interesting https://www.appfolio.com/ So once I hit some 7 doors I think I will suitch to this option.

OK. Let me make propose the next exercise to all.

What is in general your MINIMUM Rate of Return for your Real Estate projects? 

I know that there is a lot in play, Market, Project, Inflation, Leverage conditions, etc, but the exercise is mente to get and idea of the mindset and see if we can come out with some trends nationally and internationally.

So let me go first:

MAIN GEOGRAPHIC AREA OF INVESTMENT: Central Mexico (yea Mexico)

MAIN TYPE OF REAL ESTATE INVESTMENT: Single house / Rental and Apartamento Buildings

MINIMUM EXPECTED RETURN (ROI): 12%

INFLATION RATE  (CPI): 4.5%

There you go, lest see what we can find out of this.

@Immanue Sibero

Cap Rate is only an information rate basically using the original sale price divide by the expected NOI, So is only a measure of Expected Return. (SALE PRICE/ YEAR NOI = CAP RATE)

So basically is a rule of thumb, as all rules of thumb, it will only tell you if you are going on the right direction.

I woudl recommend definitely to calculate your Cash on Cash Return and your Total ROI. Cash on Cash will let you know the rate you will get ON CASH for every dollar you put in to the project, and your Total ROI will include the Cash on Cash but as well will take in to consideration Appreciation, so will give you a better measurement of your return.

Now, to answer your last comment. Well the value of the property changes a lot if its financed or not. The price does not change for the SELLER, but it does for the buyer. The seller gets what his asking for but the buyer has the option to use Other People Money to pay for the property. And to start with, Other People Money has inters (the cost of this money), so definitely you are not pinga the same amount of money that the seller is getting.

This changes everything, you have a Mortgage on one side but you have as well Acurde Equity at the same time that you have to account for, so the published selling price doe not tell you much at this stage if we are speaking of returns. You are probably using a 20% down payment (so your personal investment is way lower than the published price) and if its a rental, then the tenant will be paying for your Mortgage, so, in summary, you are getting (if the project is a good one)  some net chas each month, as well as some Acurde Equity and Appreciation, so  the way to go to calculate if its a good business or not is by getting first a Positive Cash on Cash return and as well a Total ROI that meat your investment criteria.  

Thanks. Looking forward for the knowledge and networking

My name is Federico Cantero and my full time job is at Automobile Industry realestate on the Bajio region. as and Investor Im betting for housing on the cities of Leon (Industry tenants) and the city of Guanajuato ( tourist).