All Forum Posts by: James Ritter

I found a deal that looks pretty good to me after looking at dozens. I am hoping some veterans can jump in and tell me if I am missing something or if I am on the right track. In case I am breaking rules I don't want to actually link the page but if you search it you can pull the financials where it is listed.

986 Sexton Dr   Stone Mountain GA

22 Units

100% Occupied

Asking: $2,000,000

Down Payment: $500K

T3 Annualized Actual Income: $198,672

T3 Annualized Actual Expense: $73,487

Debt Service: $85,934

Net Income  $39,250.25

I come up with a 6.26% Cap and 7.85% COC ROI which I would be happy with on a first deal.

The Proforma shows a 14.48% COC ROI. I am completely ignoring this part of the Memorandum. Do you usually do the same? It does look (based on Craigslist and Zillow) that the rents are under priced. What tools do you use to confirm or dispute that?

If this was a deal you found. What questions would you be asking? Would you consider this property? Why or why not?

As always, Thank you in advance for any insight you share

@Jeff Filali

Thank you. That is what I thought. Considering im brand new to this its hard. I am in the "I dont know what I dont know" stage of this process. Your reply is very helpful.

@Bjorn Ahlblad

Yea I knew right away it wasn't for me. I was just wondering if I am missing something big that just does not allow me to be competitive. 

I realize I posted this in the wrong section. I am hoping somebody can move it there.

I am new to analyzing properties and keep noticing something that I am not sure how to understand. Here is an example below. No intention on buying it, its just for example purpose for analysis training.

18 Unit Condo

St Petersburg, FL

Asking: $2,400,000

T12 Rental Income: $215,040 (Yes I know the 1% rule)

T12 Expenses: $135,942 (Did not adjust for more tax liability after purchase)

Net Income: $79,098

Now if I were to put 600K down and service 1.8MM in Debt at 4% then

Mortgage Service: $103,121.70 Yearly

Net Income -$24,023 so obviously Negative COCROI

If instead it was purchased with Cash and netted the $79,098 then my COCROI would still only be 3.3% with a LOT of capital tied up.

So now on to the questions. 

1) The Proforma claims "Rent Potential" of an extra 100K when you raise rents to market levels (which would then be a 7.5% return). Tenants are currently MTM. Are they asking a sales price based on what you will supposedly earn later? I see a LOT of places seeming to do this. Seems silly to me to price in a rent raise that has not happened. They are just asking you to take some crazy risk to get ANY return?

2) Are deals like these done on debt often or are they usually looking for the guy that only wants 5-6% after paying Cash? Like a big Fund? (Which this deal would still be bad for and also small). IE, would your advice be that if you cant do it on Leverage then its not a good enough deal?

3) Do you try to make the deal work for you based on the T12 and ignore the supposed future increases that are being displayed in the Proforma? For example, this deal would work for me at 8% at $1,200,000 as it stands which is only 50% what they are asking. Would you offer what works for you on every place you look at and see which ones bite? Maybe with a letter of Intent?

4) What tools do you use to research the marketplace for rentals? You can look at rentals on Zillow and Craigslist but how do you know what people are asking vs actually getting? Post fake ads and count the replies? Obviously I don't want to do it that way and am just curious on your strategy for analyzing the rental market as a whole in the immediate area so you can build a proforma you trust.

I know the deal is terrible (unless there is some huge appreciation in St. Petersburg FL and future value is priced in now which I did not look into). What I am trying to find is what I am missing for analysis purposes for what is market competitive. For example, if most buyers of the more expensive multi family homes such as in the 5MM-10MM range are paying cash then I am already at a disadvantage buying with debt and will have to look much harder for deals. Are deals that you can buy on Debt with an 8% return reasonable to expect after looking at a few hundred or are they more like unicorn deals and you have to get super creative or an in with a great broker.

Thanks to everybody in advance for responding.

Hello Everybody,

I am still really new to real estate investing and have a few questions.

I found a property that has not paid taxes since 2003 in NYC. I would happily pay all the back taxes if I were to get the property under contract. Before I go searching for the next of kin (Owner deceased) I did a search and found that the city court entered a judgement to start foreclosure proceedings in 2012. Supposedly it is called Rem Foreclosure. Now from my research it seems that you still have up to two years since the Deed has been recorded under the citys name to reclaim the property. The system (Acris) lets you search document history on a property and I still do not see the deed issued to the city. So my question is..... Does anybody know of a really good online Deed search service that I can use? If not, where do I go to see who the deed is under right now so I can make sure im not wasting my time if the City does indeed own the property now. 

Thanks guys!

I came across a property that looked to be under contract in February of 2015 (year and a half ago) but does not seem to have changed hands or at least the system I am looking at does not show a deed since then.

I have come across this a few times where the purchase contract is a year old but no new deed recorded. Am I to assume that the deal did not close and will not for some reason? Would it be a good move to reach out to the seller and see what is going on?

Hey Rick. Thank you for the advice. I will check it out.

They are not current which is actually what led me to the property in the first place. Has not paid taxes in a few years and has a pretty high water and sewer bill as well considering. 

I will just try to contact the guy with a few different methods and see if I can get more of the story.

Awesome thank you. I checked the Tax Records and same thing, just first initial of C.

The only thing I could find on the property is a UCC from an oil company but again just first initial C.

This is super confusing. Here is what I found.

1) UCC from oil company was filed under two different names one of which is deceased but I cant find any connection between these two people other than that and the owner for the property is listed as the person with just the first initial and different last name.

2) I found another document that has the owner but another name which is a "care of or managed by" person whom is also deceased.

3) The water bill is under some other persons name which seems to be the daughter of the person that the property is supposedly managed by but could have easily been a tenant (3 family home). That person seems to have moved a few months ago also.