All Forum Posts by: Account Closed

If you are buying for the land what do the 6/6 comps have to do with your offer. Raw land is $1.4=1.7? That's the value to you.

You should really not be looking at a cap rate as an "earnings" measurement. It really only represents a relationship to NOI and purchase price for YOUR property at ONE point in time. Also the sophistication level of smaller residential property investors is not at the level that you could count on their calculations of a cap rate if they chose to do so, Much better to look at GRM of similar properties. Unless you are in a rent controlled environment you would be able to use market rent rates and actual sales prices to determine if you are paying too much for a property.

Geez, STFU! Who's in for April Pau Hana?

Nauru?! OMG! Is that one of the new buildings that is rumored to be level, plumb AND square? I come stay for two minutes of equilibrium, with your permission.

And your taxes would have been about $4,000 a year under Prop 13! Gotta love CA RE.

Sorry I'm new here and you only mentioned your radio show so that's what I thought your job was. And in fairness to me you posted, "I also don't think $1100 a month is a very good return on a $200K asset. It's important to look at return on asset and not just return on investment. What if you took that $200K and bought 2 properties in a lower cost market with combined rent of $2200? You've just doubled your ROI. " I mean come on, what if you'd said "what if you bought ten $20,000 and got rents of $11,000 and combublated your ROI" Do you see how someone could not take you seriously as a seasoned REI?

Now I have no radio show but have been investing in real estate for about 3 times as long as you and have been involved in sales and appraisals during that time for others so I'm not trying to be sarcastic or condescending but if someone tells me I'm working with a crystal ball then I may beg to differ.

Are you also stating for a fact that YOU do not know how to calculate an appreciation rate and do NOT know what the appreciation has been in the areas you invest over your holding period as well as not knowing the % rent growth?

As far as Fred and Homer, RE is LOCAL and reasonably recent! Common holding times are 30 years. I keep tract of 30-50, 188 years from 1933 doesn't influence me much. 1933 Detroit has very little influence on LA SF HONO.

OK, not sure if you're just funning me but you can forget the basic business or econ course and just do a basic math. I gather you're a radio broadcaster and starting to REI but even in broadcasting I thought basic math was important. "We'll be back in 2 and 2!".

Real estate has cycles. In CA it's generally 4 steps up one step back. Remember it was in 1978 that PROP 13 was passed because of YOY fantastic appreciation. And it's been that way ever since.

Anyone can calculate an appreciation rate with basic math skills and information on sales over the last 30-40 years. It ain't rocket surgery! And it's not all crystal ball mystic. What potion are you selling? ha ha

I agree that it may be harder to calculate in Podunk when the sewing machine factory went out of business and it was 20 years later that Toyota came in and built. But when you calculate the rate OVER TIME you identify the reasons for the spikes and the declines and make an educated guess on the future.

I PREDICTED on the WEB the recovery in California when EVERYONE was posting about 15-20 years to recovery. ha ha

I've seen the people that were jetted off to NO IN TN to 1031 their Honolulu properties in the mid 2000's that then saw tremendous value drops while Honolulu held pretty firm. I've talked to the CA people that considered/some went for it Vegas properties because "GEEZ, they're half priced" only to regret the constant long distance problems.

I'm not saying that you can't do good out of state or that CA HI are the only places to invest but that the basic principles work in both areas. Friends don't let friends buy crap! Every town has a wrong side of the tracks.

Math, the whole math and nothing but the math works.

Yet you think you control rents, expenses and value? Any basic economic or business course will explain inflation and real growth. ANYONE that does not know the appreciation rate or rent growth of their market is buying foolishly. In both CA and Honolulu the appreciation rate for the type of properties I buy runs 9-11%. While true that that is not linear growth it pretty much duplicates in 10ish year cycles. That is NOT icing on the cake. That is money in the bank. That is equity I can take out to buy other properties.

In Vegas the rate going in was 3-4%. Then it exploded but when you factor in the implosion you're probably back to 3-4% long term. You cannot make an informed decision on ONE (2006) year! I'm not sure I would count on that again. Part of my purchase decision was based on water restrictions but Vegas keep stealing water and building. Now I'm concerned about demand. Vegas is no longer the world gambling mecca. CA Indian gaming has had major impact on south Shore Tahoe and while there probably will always be a Vegas I'm not sure of it's long term growth.

Long story short, don't poo poo CA investing based on initial lack of cash flow if you can afford it and are willing to hold.

I like buying properties that have high rent growth, good appreciation, low vacancy and low maintenance. That is what you get in California and Honolulu. I do have a SFH in Vegas bought 1994 just before the craziness. Lets be honest about what happens to cash flow of a couple of hundred of dollars a month when you have to replace an air conditioner for a couple of thousand dollars.

Rent per square foot in Honolulu $4.36, Vegas per sf $.78. Honolulu vacancy 0%. Vegas, about 5% with turnover about every two years. California caps my taxes at max increase of 2% assessed value. Vegas is I think 8%.

AND, please people, just because you know how to compute a cap rate does not mean you understand how it is used. It is totally inappropriate for SFH's and even if you compute it it means nothing except that YOUR purchase created that rate that has NOTHING to do with the market or profitability.