All Forum Posts by: Jason Rosenbaum

Thank you all for the responses. @Jeff Kehl this makes perfect sense since the units still are worth something even if they are vacant. I understand I am doing the work to add value, which is why I was asking how much I should discount based on the work that I myself put in. The thing is, I am very new, so the projections of construction costs and how long it would take to get to market rent would be very difficult for me, and may be wayy off. This is where I lack the most - I am a strong numbers guy but have no clue how much to project when it comes to construction. I guess this would only come from more experience? If you have any suggestions on how someone who is new to make a relatively accurate projection on construction that would be much appreciated. But that being said, any offer I put on a property will be just a guess at that point because I cannot accurately project the construction value. Then when I do my due diligence, I will get estimates and back out or move forward accordingly. This is where I fear the most. I will need to make another spreadsheet for this. Thanks for the input!

@Henri Meli I am looking to buy and hold and add as much value as possible over a period, then refi in 4-5 years. I am confident that I would be able to get rents up to market than apply a projected vacancy rate. When I do my analysis, I would typically look at the potential gross income than apply a vacancy rate to that. Over the course of 10, 20, 30 years there will never be 100% occupancy, but I subtract that projected rate from the overall rent roll. I will take a look at link you sent over. Thanks a lot! 

Hi BP,

I wanted to get some insight on analyzing a multi family deal. If I were to purchase an 8 unit property with a few current vacancies, but all are rent ready, is there a rule of thumb on how much the value of the property I should consider?

For example:

Scenario 1: An 8 unit property has a total rent roll at market rent fully occupied of $100,000. There are currently 4 vacancies making the actual rent roll $50,000. Obviously the seller wouldn't sell for half price just because the units are vacant. What gross income would you evaluate the property at assuming no upgrades need to be made to the units? Would there be some middle ground?

Scenario 2: This leads into my next question. If the same property has a current rent roll below market rent and is fully occupied. The rent roll is now $70,000. Assuming no upgrades to the units need to be made, and let's say the current rent roll for all leases ends in 6 months and than I can bump it up to $100,000 at zero cost (obviously hypothetical). Is there a general middle ground of gross income I should be evaluating a property at? In this scenario, I would have a total gross income for the year at $85,000. Would I than evaluate it at exactly $85,000? Or is there some middle ground that I would evaluate due to future gains and future value, so I can potentially evaluate the property at $90K or $95K which will account for my work of getting the rents up to market?

Scenario 3: Than my last question would be adding that next variable in, cost to upgrade to get to market rent. How would one factor in a projected cost to upgrade to market rent? Would you subtract the project cost straight from your purchase price? Or again, is there a middle ground that you would typically evaluate the property at for future value?

I know this is a lot, but any insight would be appreciated!

Thank you

@Omar Khan thank you for the reply. I am definitely looking for value add properties and cash flow. My goal is to gain financial independence through real estate. That being said, I have enough cash on hand for maybe 1 decent commercial property in my area. After one property, is my only option to grow to find private lending unless I wait a few years to accumulate more wealth? (I'd obviously prefer to grow quicker than that). Thanks again!

Hi BP, I am a new investor looking for my first deal. I have been actively looking for 2-3 family and have put in a few offers but nothing has gone through yet. I would like to start to focus on commercial properties such as mixed use/larger multi/retail due to their higher returns. I’m having trouble figuring out what to look for in this space. Should I be solely looking for distressed properties to rehab and pull as much cash out as possible upon refi? If this strategy isn’t as applicable to mixed use/retail, what value add components should I be looking for and if the strategy doesn’t apply, how can one grow their portfolio after the first property besides full private lending? Is there any way to pull cash out on these properties? In addition, how can you determine what you should pay for these properties? Is it solely on comparable cap rates? I don’t understand how this is viable because if I am looking at a million dollar property a small change of .25 in cap rate could change the estimated value by over 50k depending. How can you run comps when this small of a change can have such a large impact on value? Thanks! -Jason

Hi BP community! I am new and looking to get started in buy and hold with as much cash flow as possible. I currently have a full time job and am an active RE agent on the side (nights and weekends) in NYC, so this would be part time (for now). I am looking to go out of state in single or multi family homes and apartment buildings (6+ units included) because the NYC market is so expensive with little to negative cash flow. I have about $200k saved up to start investing and have been religiously studying RE investing for the past 6 months and am ready to get my feet wet! I am looking for advice on the following: 1. Ideas on where start looking to target a specific market (will probably take out a mortgage on my first investment) 2. Advice on how to landlord out of state especially part time - eventually I would look into property management but if I were to purchase 1 property to start off, it would eat right into my entire returns 3. How to source deals out of state. I understand I can build my lists for direct mail, digital marketing etc. but how can one actually educate themselves on a market when they are not present all of the time to drive around neighborhoods, network and meet as many investors, local RE agents, wholesalers etc. 4. I am assuming it is going to take at least 3-6 months to actually find my first deal. Would you still suggest traveling out of state every weekend to learn and educate myself? This would probably cost thousands of dollars over this period to travel this much, so I am unsure how to go about this. Any help/advice would be much appreciated. I look forward to becoming an active RE investor! Thank you