All Forum Posts by: John Pearson

Thanks Ryan.  All of that makes sense. How are you sourcing your deals?  

 Thanks Steve, but how can you analyze all deals if you are looking all over the country at once?  Don't you have to at least narrow down your geography  to a manageable level first?

I have access to CoStar and REIS through work, so I have excellent data analytics.  

Thanks Steve, how did you initially determine what areas to look at when you decided to invest out of state?

 I am lost from your response.  Why would someone with operations experience have all the answers to acquisition criteria?  Asset Management is not at all the same as Acquisitions.   

I am looking for advice on what macro level criteria people have found successful in choosing target markets.  Can you help me with that?  I don't need advice if it is worth it to risk money.

Hello everyone, I was hoping to get some general advice about how to pick a handful of cities to analyze for my first investment acquisition.

I have put together a small pool of investors and we have ~150k in seed capital.  However, due to the fact we all live in southern CA, that honestly wont get a whole lot even if we leverage it and the returns are so low most deals honestly dont make a lot of sense.

So we have decided to look out of state, but want to at least put some research and analysis into the decision.  I was hoping to get some ideas from some members here on what type of criteria would be most important.  My thoughts so far:

Population growth

Rent growth

Income growth

Employment growth

Any idea about other metrics and which would be the most useful for choosing a target metro region? Many thanks.

Ps. I already asset manage a small portfolio of about $3M in assets remotely so I do have a solid operational understanding of multifamily real estate, but this would be my first acquisition and first asset out of state so any advice or thoughts would be greatly appreciated.

@Dave Foster 

Thanks for the information that was very helpful. I will def I reach out to you again if it sounds like something I would like to pursue. 

@Rick H. 

Yes she is the trustee as well as executor. 

I am quite aware that I cannot buy or sell on behalf of the trust. If it helps you to think of it as academic that's fine. 

If lending institutions will only do 50% LTV, then that sounds like another compelling reason to sell it vs refinance.

@Dave Foster 

Hi Dave, I was wondering if you could tell some more about the reverse exchange you mentioned and how it is financed.  If one were to use the proceeds of the sale of property "A" as the down payment on  property "B"  would that be possible with a reverse exchange and an EAT?  

Hello everyone.  Thank you for all of the replies.  I will try and answer as many questions as I can and hopefully clear some things up. 

I guess the main question I have is in a more general sense.  What would be the pros and cons of a cash out refi vs. sale of the property?

From what I can think of:

1) Possible capital gains tax on sale 

2) 6% broker commission

3) Loss of rental income during the transition between properties

4) Higher ROI on new property.

What else am I missing?

@Joe Villeneuve 

I understand completely. I am just now taking the first steps into the feasibility of the sale of this property so I am still gathering all the details at this point.  As I get a more concrete idea I will probably add additional information to this thread. 

@Rick H. 

One of the main reasons for the previous appraisal was in order to receive the step up in basis when my father passed away.  The "swap til you drop" is definitely something I have thought about so depending on the amount of taxes owed, a 1031 exchange is definitely a possibility.

Hello, I would like some advice on a property that my family owns.

It is two SFR's on one lot (detached) in LA County that was bought in the early 80's and is now owned free and clear.

It has an NOI of ~30,000 and I think it would appraise between ~800k - 1M (it appraised for 700k in 2008 when my father died), but it's really hard to find comps like this because of the multiple properties on 1 lot.

So with the market in Socal getting really hot again, I thought now would be a good time to either sell the property (into a 1031 exchange) or do a cash out refi and use the proceeds of either option as the down payment on a commercial property (which would obviously have a higher cap rate).  

The math and analysis I have done suggests selling it would be the better option, but anyone with a contradictory opinion would also be greatly appreciated.