All Forum Posts by: Account Closed

@Brandon Luke It means per unit, or main entrance door. For instance, a four-plex is 4 doors. 

@Jake Jefferies that's a great resource! Thanks!

I'm a wholesaler here in Phx.  I'm looking into marketing for multi unit properties; duplex, triplex, quad and up to say 5 units. I've been researching cap rates for the Phoenix area multi units based on a May 2013 national report I found which broke cap rates down to city level and classes.

My question has to do with how to they distinguish between Class A, B and C when breaking out cap rates. A having the lowest cap rate, C the highest. Can't seem to figure it out why the distinction.

Also, in talking to different investors here, it seems like the cap rate (I assume A, B,C) depends on what area of town.. 

Can someone explain where the classifications come from?

Further I assume then when analyzing a potential multi unit deal, say a 4 plex, that I should compute potential purchase price on the expected cap rate (A, B, C) using a 50% rule as a first pass?

Thanks in advance for any guidance provided!

@Mark Maire  That pretty well sums it up. With an assignment, you don't need to go to title to close. Close is between seller and your buyer. Title usually sets up to come in separately. You would only come in to sign if you were to do a double close.. You sign on the first close as the buyer and whilst there sign seller docs for the second close. With a $10K assignment, I would double close so neither seller nor buyer see the $10K fee (or difference between buy and sell in a double close). I usually assign for $5K and below and double close higher than that. Sellers/buyers usually don't question the $5k, but might a $10K spread.. all depends.

I use spreadsheets for my direct mail data base(s). You can identify a column for Status. In the Status column, I use codes.. Like RTS = return to sender (when I get mail returned to me), REMOVE = remove (I don't actually remove them, I just don't mail to them again) and ACTIVE = active (these are leads I continue to mail to). I have a column for Source. You can put codes for absentee owner, vacants, probate, whatever. I also have a column for mail date.. I do use podio once a lead calls in. They get input into podio.. Status in data base becomes REMOVE. I also use podio to track campaign response and expenses for the business.

Agree with all of the above. It's good to remember as well that those are gross numbers. What are his marketing costs to obtain those deals? Here in Phx, it's so competitive you may spend half or more of that to find and close a deal..

You don't market a property you don't have under contract.. I don't know where you started on price in your negotiation (your start below MAO and work up), but it sounds like you left no room for negotiated. Regardless, if you got up to your MAO and they did not accept, pass for now. Put them on a follow up list and call them back in a couple weeks and see if the house is still available and if they reconsidered your offer or not. Then follow up again and again in increasingly spaced intervals. You never know, they may change their mind and become more motivated later. But for now, move on and look for the next lead and don't waste anymore time worrying about this one. It takes a lot of offers and leads to land one deal.

Sounds like you don't want to be a Realtor anymore. But, you don't have to throw the baby out with the bath water. Try not to think of this "retirement" thing in black and white, all or nothing terms. You could step aside from being a Realtor, take time off (a year perhaps) to clear your head and pursue other possible avenues of income. Perhaps work part time at something.  Or, find something with more time freedom where *you* can decide when to spend time at work or spend time with you family and kids. Your kids are young.. but when they get older, more expenses come. Life also has a way of throwing curves and you'll need money you thought were going for *retirement years* to cover them. I would not all together *stop* working for years to come, if I were you. My advice, take some time off - my friend, it sounds like you need it! During that time, find something you love to do that can earn some extra income at. Explore other options that fit you and your lifestyle better. But don't *retire* from continuing to contribute to, grow and add to your income and savings during these fleeting *young* years of your life. It's better for you mentally and emotionally as well to continue to work, take on challenges and stay busy at some level. 

I agree with @Brandon Luke . You could say you reviewed it with your funding partner and he doesn't want to through with the deal at the price offered initially over the phone. Or you could simply say you went back to take look at your numbers whilst getting ready to write up the formal contract and noticed you had missed some items in your original calcs when you gave her your preliminary offer over the phone..  Having re-done the numbers, you realize you just can't make it happen at the price you originally gave her over the phone. She'll be somewhat upset and ask you, well what price are able to pay then? At which point you say, well, we need to be at... ($XYX) to make it happen. Worst case, you pass on the deal, no harm no foul. Best case, you get the deal at the price you need. 

Do you have this under contract yet? You might need to extend closing if you do. I have had to extend closings because the property mgr took their time in getting me in. They seemed mad that the owner did not use them as a listing agent.

I know you want to see the ppty now, but you'll also want to see it when tenants leave. My guess is there will be additional damage... Thus, you may want an inspection period that lasts up until the day prior to close, and make sure the tenants are out prior. I would therefore write up a contract now to lock up the deal, expect a healthy rehab due to all the animals and extra damage, etc. Put closing out after tenants move out and have and inspection period lasting up until 1 day prior to close to cover yourself.

I wouldn't pay the ppty mgr any commission, by the way. There is no need for it.