All Forum Posts by: Jessica O.

Hi all - 

We've mostly stayed local in our RE investing in Colorado, and are looking to start stretching out to other markets. In the area of CO we're in, cash flow is typically break even or a little higher -- but it's very solidly an appreciation market - prices are high. In looking at some of the properties I've found in Nebraska (primarily multi-family) - it looks to be the opposite: property prices are relatively lower than CO (although there are some flips that seem to have big gains in the last 2 years), and cash flow is higher per unit. Does this match with your experience? What are other things that seem 'different' about NE real estate? Higher/lower vacancies? Older properties? 

Thanks @Mack Benson. I'm considering an ARV appraisal as running the numbers from an NOI perspective puts out one appreciation number, but am concerned that because it will be a 4 unit it will still be evaluated residentially (even though our loan is commercial at the time).

Appreciate your reply! 

Hi everyone! First off - thank you to all the newer members who post questions I didn't realize I should have, and the members who have been learning from this site for so long - thank you for continuing to contribute! 

I am a first-time investor that's midway through a deal for a triplex. Each unit is 2 bd, 1 bathroom. The building was built in 1981, and interiors have been updated over time. The median rent in the area is $1,200 for such units (as of the last 6 months, when looking back 12 months it was $1,300). The units are currently pulling in 900, 1100, and 1225 ($50 of this one is garage rent). The interiors are good with no major repairs needed. The exterior, however, has been ignored. Most significantly, the property is on a hill and has 4 decks. 3 of them need to be replaced pretty immediately as they're rotting and to us, leave us open to quite a bit of liability when they eventually go down. The retaining wall at the back needs to be repaired/reinforced, and the steps around the platform (flatwork) are uneven and without rails. We estimate that all of this will be $30-40K in work. 

A last note - the building has a garage that we'd like to convert into a 1 bd, 1 bath unit as well. The garage is two cars deep by two cars wide, but only has one door. We think this will add significant value to the property as it'll bring the NOI up, and we anticipate a $40-$50K investment here.

Area: Colorado Springs, CO (in a nicer part of Colorado Springs that draws a lot of tourists and outdoorsy individuals)
Price: Asking was $550, we bid $555 to beat out another offer
Concession: After a lot of back and forth, the concession we've received is 15K off for a total price of $540
Cash Flow: Excluding the major repairs, property will cash flow around $100/month (including property management) before the additonal unit and closer to $700 per month after the additional unit, conservatively.
Loan Terms: 25% down, 3.5% rate 30 year loan

The CAP rate at the new price ($540K) is 5.8%, which is in line with other buildings in the area (Avg is around 6). There are not a lot of recent comps, unfortunately. Estimating out future resale value using NOI and cap rate after the new unit, I get to a selling price of around $730-$760 in the next couple years if we decided not to hold. I'm looking into whether our appraiser will do an ARV appraisal as well.

The sellers have been so difficult in this process, it's making me second guess the deal (along with COVID). Please - if you see any holes, or red flags - I'd love any feedback. 

When considering adding a new unit (garage conversion, likely one bed one bath) to an existing building (triplex), what methods do you use to estimate the value add to the property at time of next sale?

Hello everyone -

First post. We've recently bought a house (our full time house). We're in a position to make high additional principal payments into the home  - but would like to get into the rental market eventually (perhaps a year to two years out). Should we continue making high payments into our current home, and then pull a second mortgage out to begin our rental properties - or should we just save the money outright until we're ready to dive in?

Thanks so much!