All Forum Posts by: Jeremy Jessup

Thanks Stephen, I'll take a look.  I've never been to PA before and have no knowledge of the market there, but I'm not averse to investing out of my area.

... and here's the point where I wish I had more available funds for a down payment.   =^)

After doing some more hunting, it looks like the average CAP rates people have been listing have been 5-7% for this area. If I had the means (and if I could verify all the numbers they provided) it sounds like this would be a good deal.

Thanks Casey (and everyone else who's offered input) - This has been really helpful in getting some perspective on how to evaluate a property.  Thank you for the varying perspectives too... helps to see the different approaches.

No problem.  I'm hoping to work my way up to large complexes myself... just trying to learn how to get started.  If I hear of any large complexes in my searches I'll let you know.  For what it's worth, construction has picked up again in the west valley (Buckeye, Goodyear, Avondale) for homes, and a theater is under construction in the area that rumor says they plan to build a mall in Goodyear.  I wouldn't be at all surprised to find some new complexes popping up in that area ( generally on the east side of the loop 303 and I-10).

Thanks Bob. Yeah, that makes a huge difference for sure. If I'm understanding the rest of the info on this property correctly, are you saying that by analyzing a bunch of other properties the same way I should be able to determine an average to compare a property against? Or do I need to get in touch with a realtor who can pull info on completed sales to get the actual CAP rates from other transactions? How do I go about developing that baseline to get familiar with my market?

Thank you all again for the input.  I've never been a numbers guy, so it's a stretching experience to try to wrap my head around all this.  Could you help me apply what we're talking about to a real world example?

Right now I’m looking at some info on a property in my area which consists of 7 units.  It's probably out of my reach financially, but for I'd like to use it to learn what I can.  Based on the info below, is this a good investment (and why, or why not)?

Asking price is $350,000
Owner Pays: Sewer, Water, Trash
Tenant Pays: Cable TV, Landscaping, Electric

Income & Expenses Gross Annual Sch Inc: $51900
Income & Expenses Adjusted Gross Inc: 49305.00
Income & Expenses Operating Exp: $18973
Income & Expenses Net Operating Income: $32325

Number of Units: 7
The five 2 Bedroom Units Average Rent: $560.00
The two 3 Bedrooms Units Average Rent: $650.00

All units are rented and all tenets are on long term leases.

Total Monthly Rental Income: $4325.00
Vacancy Allowance: 0.05%
Annual Water/Sewer Expenses: $4000
Annual Trash Expenses: $1500
Annual Management Expenses: $4700
Annual Maintenance Expenses: $3000
Annual Landscape Expenses: $1440
Annual Insurance Expenses: $2340

As near as I can figure (I've gone through a number of pod casts and materials, but there's a lot to learn), it sounds like as a buy and hold investment this property would earn $32k per year.  Presuming a conventional loan with about a $2000 a month payment (does that sound like a reasonable assumption?) it would make $8000 per year in profit.

My understanding is that the NOI is about $32k that would mean a about a 9% CAP rate. Am I understanding this correctly or am I missing something big?

So I'm new here and I'm just now working through the materials on the site.  I'm beginning to get a perspective on what to look for, but I'm not sure where to start financially with my present situation.

House hacking doesn't look plausible (family of seven, tough to fit into a duplex or the like).  I've got minimal cash on hand (could scrape together a couple thousand, but not much more than that), so a typical down payment is out of reach right now.  I have some physical limitations that would keep me from doing much repair work in a fix and flip situation (providing I could afford the time in the first place).

What I do have is credit and low debt, but I'm not sure how to leverage that without capital.  As a graphic artist, I can make marketing materials, but without something to market it's not terribly useful.

I'm not trying to be negative (or positive for that matter)... just trying to make a realistic evaluation of what is possible.  Can you suggest a way to get the ball rolling to build up some capital to work with (or recommend a specific resource I should review from BP)?

Thanks for the input so far.

Casey - I'm going to start taking the free course BP offers before I start looking for properties... I don't even know what a "CAP rate" is or what "cash on cash" means yet. I live in Arizona, but have lived in a number of other states over the years and would be happy to invest elsewhere if there's a better market for my needs. Do you know how to find a good target area to look for investment opportunities?

Vickie - Good idea... I get lots of hours in the car each week.  Hopefully, as I learn more about what's involved, I'll be able to partner with some folks who can show me the ropes a bit (I've just gotta know enough to be able to bring something to the table... and that might take a while).

Hi everyone,

I just stumbled onto this website today via a couple of Youtube videos from the site.  My family of 7 is supported by my full time graphic design job which (when you factor in the hours commuting) has me gone about 60+ hours a week.  That coupled with some personal health concerns has me seriously looking into other options.

I'm looking to replace my income with rental properties, ideally within 5 years.  I want to learn how to leverage my credit (singe my credit is high and my capital is low) to build a rental inventory.

The problem is that I'm plumb ignorant and have a lot to learn (and could use as much hand-holding as possible to get the ball rolling).  I've got a lot of material to go over... glad I found this site.   =^)