All Forum Posts by: Account Closed

You might want to call the CA FTB.  Better yet, I'll have them call you.

I'm trying to give you factual information. If you have the market value of a property then why are you calculating a cap rate. Return? How is the cap rate accounting for rent increases, capEx or appreciation since it only looks at one years NOI?

Now if you think a cap rate is a helpful number using it the way you do, ie. I buy $100,000 NOI for $1,000,000 then I have a 10% cap rate but I can show you that the market cap rate is 15% then you have over paid $334,000! on ONE property! How is that NOT constructive?

VALUE= SUBJECT PROPERTY NOI/MARKET CAP RATE FROM COMPARABLE SALES

Um Ned, the OP is from Davis CA.  That is in California. 

I also don't agree that markets that have higher appreciation OVER TIME have larger swings.  It is generally the markets that have a one time spurt that then have the one time crash.  That is why it is so important to KNOW what the appreciation rate has been OVER TIME just as you would want to know the rent rates and expense rates and the vacancy rates, OVER TIME.  I predict that a lot of people that have jumped into markets in the last 5 years of up markets are going to be in a world of hurt when their market metrics return to the mean.

OK but you are at a big disadvantage over a TX resident investor since he is NOT paying CA income taxes ON TOP of the high property taxes.  What can the same accountant do for the CA investor that he cannot do for the TX investor?

A cap rate is not a rate of return on real estate. ALL it measures is the market value of a NOI.

You need an actual NOI calculation on the property in question. Here you have non market rents to start with so that would understate PGI. Then you would divide that by what the cap rates that similar properties have ACTUALLY sold for but there is no reliable place to get that information since 4plexes are sold using the more accurate direct sales comparison.

You NEED both the NOI calculation AND the sale analysis to get cap rate comps. No one can provide that. They can make wild *** guesses but is that how you want to invest your money?

You gave a range of 4% and 7% cap rates. If a $1.5m property is selling at a 7% cap rate the NOI should be $105,000 but if the NOI is only $65,000 then the value should only be $928,600! See how not knowing the NOI or the market cap rate can be manipulated so that you are overpaying $600,000!

What could go wrong?

http://www.nydailynews.com/sports/football/ex-nfl-...

 Ronald there are NO cap rates on 4plexes.  No one in the Bay Area can provide verifiable cap rate comps for a 4plex.

Also Even if there was a source of verifiable cap rate comps for 4plexes you are using them incorrectly. CHANGES in NOI either increases or decreases the value. It does NOT change the cap rate.

Also how do you explain the Section 8 rents being so much lower than market rents?

 If you are investing in TX can you answer my question about the double whammy of taxes?

 How will you deal with the double whammy of high TX real estate taxes and high CA income taxes?

http://www.mercurynews.com/2016/09/25/bay-area-wag...

Case in point: Over the five years that ended in July, the median home price has rocketed up 94 percent in San Mateo County, 74 percent in Santa Clara County and 67 percent in San Francisco, according to figures from the CoreLogic real estate information service. While the median in the East Bay is lower, home prices there have increased even more: up 105 percent in Contra Costa County and up 99 percent in Alameda County.

Invest $100,000 and walk away with $600,000 in only 5 years!  That's $10,000 a month that you would have to make in cash faux just to match.