All Forum Posts by: Juan Silva

Another option to check out is www.eppraisal.com. Although you'll likely need to take the estimated values with a grain of salt, it also includes the Zillow estimate as well as the tax assessed value and recently sold comps. I've seen the comps go back over a year, so it may help with your analysis.

@Aaron B.  I think you've gotten a lot of great advice indicating this may not be the best deal for your given situation. That said, and if you'd still like to sanity check Montrose rent rolls, you can do so by typing the address and # of beds into www.rentometer.com and it'll return avg/median rents in the vicinity. Hope this helps.

I used to be a licensed Realtor in SCLA county and the main site used for listing information at the time was www.mlslistings.com.

Take a look and hopefully it'll provide what you're looking to get.

Actually, looks like this is the correct link:

http://www.biggerpockets.com/renewsblog/2013/01/27/tenant-screening/

Re: the suggested made by @Garth Kukla 

Here's a link to the tenant screening blog I believe he's talking about:

http://www.biggerpockets.com/renewsblog/2013/01/27/tenant-screening-the-ultimate-guide

I'd like to take a short break from the NOI & cap rate argument to ask Elizabeth if she'd be willing to share some insights into the "very different type of portfolio" she's built. It might be an interesting method of building wealth for others as well, so Elizabeth if you're willing/able to divulge your secret please do tell...

I'm a newbie myself, but @Dan Brewer 's post sounds like sage advice that I'd follow especially given what sounds to be red flag information; an 8yr old appraisal, really?

That said, if it's something you can't let go, then definitely take @Aaron Mazzrillo 's advice and get seller to carry the note and give you credit at closing to fund the rehab.

Adding your $100k renovation estimate into the equation, you're looking at $379900 plus closing costs. Given that, your rents barely break the 1% rent to purchase price threshold. If that's normal for your area, then it might not be too bad. 

Considering a renovation that size would take 3 months at least, it'd be that long before you're able to start cash flowing (CF). That old of a property, it'd also be good to make sure there aren't any historic implications to your rehab. If the local historical society has any say/leverage on construction requirements, it could certainly eat into any potential CF/profit.

Other than that, my rudimentary numbers indicate a potential 8.69% cap rate and a 6.93% cash on cash return (CCR); assuming 10% property management & maintenance allowances. All that said, I think your decision comes down to answering three questions:

1. Are those kinds of numbers appealing to you? CCR is too low for my taste.

2. Are you willing and able to dive that deeply into rehabbing your first purchase?

3. Are you able to carry the costs while under construction?

This is my perspective as a fellow newbie investor and I hope it helps.

@Bill Jacobsen   Your explanation perfectly clarifies it for me, so thanks for that. Following your advice by giving seller 1/2 credit for increasing rents to market rates, here are my revised income/expense financials:

1. Total Expenses: -$6482

a. Property Tax: -$2652

b. Insurance: -$890

c. Maint & Repairs @10%: -$2475

d. Other Admin: -$300

e. Self PM: $0

2. Gross Income: $22688

a. Rental Income: $24750

b. Vacancy @ 8.3%: -$2063

3. NOI & Cap Rate: $16371 @ 8.24%

4. CF: $7176

5. CCR: 12.03%

My revised cap rate meets the 3% cost of money threshold, and unless I'm missing something else, your guidance is greatly appreciated!

@Bill Jacobsen  I just read one of your other posts on

http://www.biggerpockets.com/forums/88/topics/1610...

and think I understand now what you mean by cost of money. In my scenario, at 4.625% interest on my 30yr mortgage, you'd look for a cap rate of 7.625%. Is that correct? 

I'm still unsure what you mean by:

"If I can increase revenue I am only going to pay 50% for it since I am doing it, not the seller."

However, if I get rents back up to market rates, that would translate to an 8.92% cap rate. Understanding it's not a given, but with this potential upside, does that make the deal more palatable to you?