All Forum Posts by: Jared Carpenter

@Account Closed

Lompoc is an interesting market, one I believe you can find value in.

You have more than 40k in population, and slightly growing - predominantly a workforce tenant base. 

UC Santa Barbara is near by. Allan Hancock College is there also, employs around 400 people.

Home to the 20th Space Wing, this paired with the air-force base supports an economy also driven by tech, innovation and industry.

Major employers that support the area are UCSB, air-force Base, Dignity Health Central Coast, SB Cottage Hospital, Raytheon Co..There is prison there.

Two airports somewhat nearby: Santa Barbara airport - direct flights to Dallas, Denver, LV, Oakland, Phx, SF and Seattle. SLO airport also.

What type of asset class are you looking at and how much scale? Are you looking to establish a footprint in Lompoc?

@Gilmer Legaspi

What markets/regions are you targeting, and what asset class?

@Immanuel Sibero

it's mentioned it in my response, towards the end, " Net Annual Income / Purchase Price = Cap Rate" ...you rearrange the equation

@Justin Kane

what pockets for MF would you suggest looking in?

@Sunny Kapila

Q: Nine times out of ten, what is the most important thing to an investor?

A: Cash flow

Q: How do you determine cash flow?

A: Income – Expenses = Cash Flow.

What numbers do we need to know?

1. Gross Income (monthly)- This is simply what amount of rent you expect to receive
2. Monthly Expenses
   1. Mortgage
   2. Taxes
   3. Insurance
   4. Property Management Fee: If you are not going to manage yourself
   5. Utilities
   6. Vacancy
   7. Repairs
   8. Contract services

3. Monthly Gross Income – Monthly Expenses = Net Income. If the number is positive, Congratulations, keep going. If the number is negative, turn back.

4. Calculate Returns - There are two important numbers that you will need to focus on.

A. Cap Rate: This simple number tells you if you are buying a good deal.

Net Annual Income / Purchase Price = Cap Rate

(Note about Cap Rate: This is simply giving you a percentage number. Simply put, the higher the percentage, the better a deal. You have to decide how low you will go.)

B. Cash-on-cash Return: This number is the how much you are receiving on your actual investment. If you purchased the property with cash, this return will be the same as Cap Rate.

Net Annual Income / Total Cash Investment = Cash-On-Cash Return

@Alexander George

If I had $20m of equity to place, I like to think I would look outside of NYC in search of better yield.

Which markets within New York state are you looking? I don't think $20m in NYC goes too far. Workforce class C housing in NYC ranges from $50k -$200k+/door.

Not sure what type of capital you have, patient or fund equity... however a lot of owners in NYC are basically buying the dirt and/or are buying as legacy assets and capitalize on the appreciation. 

Hello!

Do any of you know of any SLC, UT or I-15 corridor multifamily investors that could use some help from an initial underwriting and analysis standpoint?

I lived in Utah for some time and have ~5 years of financial analysis experience (investment banking and multi-family modeling), however my goal is to more closely familiarize myself with the Salt Lake market and surrounding pockets. I have a similar goal for Phoenix, AZ and would welcome any opportunities to further dive into that market.

If any of you have bandwidth concerns and would like some extra muscle, please let me know!

Thanks.

@Nick B.

It works with a broker the same way it would work with an off-market offer to a seller you contacted directly. 

A broker's responsibility is to provide the terms of your offer to the seller.

As far as a discount on pricing for going hard day 1, no inspection, ect...it may vary deal by deal, however there are a ton of variables that need to be considered. It all goes back to seller motivation.

I think what is important to consider here is that in most cases, a hard EMD/waived inspection doesn't get you a discount but rather WINS you the deal.

@Alex K.

Basically an opportunity zone is a feature of the Tax Cuts and Jobs Act. They create tax advantages to attract capital into economically distressed areas. 

For an area to qualified as an opportunity zone, the census tract must have at least a 20% poverty rate and 80% of the median income must not exceed 80% of metro or state level. The designation of opportunity zone remains in effect through the end of 2028. 

With an opportunity zone, investors can defer taxes on capital gains until 2026, capital must be placed in an opportunity fund withing 180 days, and there is no limit to this capital.  For a fund to be qualified  as an opportunity fund, it must hold 90% of assets in an opportunity zone. Also, funds must certify twice annually that 90% of investments are in an opportunity zone.

@Daniel Dietz

CapEx is below the line.

You should however consider a replacement & reserve figure above the line.

Up-front CapEx should be included when looking at your all-in cap rate.