All Forum Posts by: Account Closed

Can someone explain this to me. I feel like I’m getting something foundationally wrong. From my understanding, a properties value is NOI/cap rate. Is this correct? What I’m not understanding is, it seems like the higher my NOI the less the property is worth.. Let me break it down with an example: NOI:$10,000 Purchase Price: $100,000 CAP rate: 10k/100k = 10% Value of the property: will obviously be what I paid for it then... 10k x .1 =100k If I raise my NOI, my cap rate goes up, and the value goes down... So if I just arbitrarily offer them 500k for the above property, my cap rate goes down but my value goes up even though it’s still not a nice property? But it’s value is higher? That’s what doesn’t make sense to me. How do you figure out what the property is valued at so you don’t over pay? Property 1: NOI: 10k Purchase Price: 100k Cap rate: 10% Value of Property: 100k Property 2: NOI: 10k Purchase Price: 500k Cap rate: 2% Value of property: 500k Or do you not find the property value by dividing NOI by cap rate? Idk if I’m making sense here? I’m basing it off of this article: https://www.biggerpockets.com/renewsblog/property-values-residential-commercial-investing-and-matters/ What am I doing wrong? This is a cyclical nightmare in my head right now that I’m trying to straighten out. Lol Thanks y’all!

Did my post title intrigue your interest? I just looked at an apartment that I’d like to make an offer on, but my one concern is that one of the tenants is a smoker. And I don’t know if anyone deals with that or not with their tenants? I’m afraid when I’m in the other two apartments that I can smell the smoke smell from the one apartment that has a smoker in it. And also has anyone ever dealt with asbestos roofing? I’ve never heard of that before.

Joel O. It’s the left side of a duplex that has already been converted to a 2-unit.

@shaun, great question! Maybe this spurs on a different discussion as well. 45k is 70% of 65k. I was told as an investor you never buy anything for above 70%. So that’s basically where I came up with that number. Updates would be mostly cosmetic to make it look nicer on each apartment. I can certainly go higher in my offer price though. I was hoping to use private money for it and then do a cash out refi in a year.

Joel O. , yeah, I would think so. But I could be wrong, I’m not an appraiser, hence the question. Lol. Then are they going to try and find a multi family that is a 1br and a 2 br or are they just going to try and find a 3/2 MFU?

Jacob Atkinson thank you for your reply! Updates could be done, but both units are already rented. The rents could go up for that area, the previous landlord just didn’t do that. I’ve been looking for units where I can use a property manager. I don’t really have the time to be a landlord, so I’m okay with taking a little less pay to not have to invest that time. Did I pull the right comps for that rental? I tried to find other multi units, or, because it’s residential, an appraiser won’t look at multi units but just other 3/2s?

Good Afternoon,

Can anyone help me out with comping a property? I'm having difficulty actually comping it out and was wondering if i could get some assistance.. I also have my analysis below if you'd like to give me any feedback on that as well, i'd be more than happy to receive it...

Property Address: 808 W King Street, York PA 

My FMV: $65,000

My Offer Price based on my FMV: $45,000

Comps I pulled:

• 1034 W King St
• 1122 W King St
• 31 Dewey St

Comp Analysis:

The average sold price is $70k, but they were all 4/2s so i knocked 5k off that because the subject property is a 3/2.

Deal Analysis:

Is this a good deal?

Did i do my analysis correctly?

Did i pull the right comps?

Was my comp analysis correct?

I guess they want to know what the deposit is secured against? I was figuring I'd the seller just lent me the money, then the bank would just get a check for the down payment right?

Originally posted by @Brent Coombs:

Originally posted by @Account Closed:

@Brent Coombs, so what i've been finding is that a lot of banks will lend 70-80% LTV. The assessed value of the property is $130k. so 70% of that would be 91k. So from my understanding, i should be able to get a loan for pretty close to the asking amount right?

@Matthew Olszak, I'll definitely bump up the maintenance. I'm getting a history on the complex over the last 2 years. so once the seller gets me that, i should have a better number.

The property management company around here charges 6% and then 1/2 months rent to put a new tenant in. But i didn't think about turn over rates for that specific location. I did look up that in that area, the vacancy rate is 6% as well, but it'd be better to make that larger either way, and i need to check if they charge 1/2 months rent per vacant month, or just in general.

I talked to the seller about financing options as well. He said he wouldn't do full seller financing, but he might be willing to do a secondary loan. So for example in Brent's question, if the bank won't loan 100% i could probably have the seller loan me the 20% down that i need to get the loan from the bank. 

Calling banks and insurance companies over my lunch break to try and get better numbers down as well. does anyone have any insurance companies that will quote them on a commercial property over the phone? Nationwide will only do in person.

No, it's not correct that you "should be able to get a loan for pretty close to the asking amount". That would only apply if you ALREADY owned it (with no mortgage against it) and were searching for a "Delayed Financing Exception" loan, or, had already owned it for at least 6 months and were seeking a RE-finance. See the difference?

Back to the drawing board (and, hitting the savings account)? Good luck....

I think there are other options, like even getting 70% LTV of the 93k, i can do seller financing then for the other 30% with the owner, and then at 6 months refi.

Where there's a will, there's a way!

@Brent Coombs, so what i've been finding is that a lot of banks will lend 70-80% LTV. The assessed value of the property is $130k. so 70% of that would be 91k. So from my understanding, i should be able to get a loan for pretty close to the asking amount right?

@Matthew Olszak, I'll definitely bump up the maintenance. I'm getting a history on the complex over the last 2 years. so once the seller gets me that, i should have a better number.

The property management company around here charges 6% and then 1/2 months rent to put a new tenant in. But i didn't think about turn over rates for that specific location. I did look up that in that area, the vacancy rate is 6% as well, but it'd be better to make that larger either way, and i need to check if they charge 1/2 months rent per vacant month, or just in general.

I talked to the seller about financing options as well. He said he wouldn't do full seller financing, but he might be willing to do a secondary loan. So for example in Brent's question, if the bank won't loan 100% i could probably have the seller loan me the 20% down that i need to get the loan from the bank. 

Calling banks and insurance companies over my lunch break to try and get better numbers down as well. does anyone have any insurance companies that will quote them on a commercial property over the phone? Nationwide will only do in person.